Logbook Loans vs. Payday Loans: Which One Should You Choose?

If you’re someone who has been shopping around for a loan, but you have been dealing with bad credit as well, you’ve probably encountered logbook loans and payday loans frequently. Here, we’re going to enlighten you about the difference between the two.

Firstly, both loans have no credit check involved, meaning you can easily get one no matter how ruined your credit rating might seem to traditional creditors. Even if you’ve been struggling with IVA’s or bankruptcies, there’s always a room for a borrower like you with these types of lending. With a payday loan, you can loan a small amount depending on how much you earn. If you’re an average earner, it may not be much, so if you need a substantial amount of cash and have your own car, a logbook loan may make better sense.

Second, both are short-term loans that tend to have considerably high interest rates. The average APR on them is higher than the average interest repayment on a personal loan. However, when compared side by side, logbook loans still appear a bit more competitive.

Now while APR and representative APR can be confusing, let’s see what a regular logbook loan site charges. Logbook loan companies are legally required to display the 1270% APR on its homepage, but that does not mean you have to pay 75 times more than the 17.9% of a representative APR credit card or 194 times more than a 6.9% interest loan. Most companies have set their interest rates at 0.80% per day, making them one of the most cost-effective short-term loan options in the market today.

The following are the minimum requirements set by the FCA:

  • An initial cost cap of 0.80% per day – This means that interests and charged fees must not exceed 0.80% of the total amount loaned.
  • A £15 cap on default fees – If the borrower defaults, penalties must not be more than £15. Interest can still be charged after default but they must not go over the initial rate.
  • A total cost cap of 100% – Lenders must not charge more than 100% of the amount loaned in fees and interest.

While payday loans are flexible and relatively easy to avail of, they can be more expensive to pay back. If you find yourself earning less than what you usually spend, it becomes easy to rely on payday loans to get by. However, should you fail to make repayments, the lender can default you, resulting in higher penalties and interests that accumulate every missed payday.

This is when a logbook loan becomes a viable option in comparison. With logbook loans, you can easily stretch your repayment periods so that you will have to make affordable payments monthly. This reduces the chance of missing your due dates and accruing more interests and penalties. This can also protect your vehicle from being repossessed.

Logbook loans generally have lower interest rates and are a great way to consolidate your current debt. A good use for a logbook loan is to pay back all current short-term loans, so that you will only be left with one account to manage all your debt. They can be a great solution for many financial problems, but keep in mind that they can also be problematic if you use them to buy things you can’t afford.

What You Need to Know About Vehicle Depreciation

What is depreciation? In the car world, it is the difference in the vehicle’s value when you bought it and its value after a certain period time. This drop in value is different for each make and model, but typically is in the 15% to 35% range during the first year, and up to 50% or more over the next three.
Factors That Affect a Car’s Depreciation Rate

  1. Mileage – The average mileage for most cars is 10,000 miles per year. The more miles the vehicle accumulates, the less value it has.
  2. Reliability – Some cars simply have a reputation for being a lemon. They might offer more value during their first year, but that number drops significantly as soon as the problems emerge.
  3. Number of Previous Owners – Everyone who has owned the car has had the opportunity to bring its value down every time it was bought and sold. The fewer former owners a car has, the better. It helps to check the car’s logbook or its V5C registration to see how many people have owned it.
  4. Vehicle Condition – Any damage to the car’s interior or exterior will reduce its value, because the next owner will have to spend money on repairs. Be sure to check for damage before buying.
  5. Service History – The more complete a vehicle’s service history is, the better. It’s service book is a reflection of its history, and it should have stamps or receipts that show servicing in line with the manufacturer’s recommendations.
  6. Warranty – Vehicles that have at least three years left on their warranty have higher value. Some manufacturers such as Kia even offer transferable warranties that cover up to seven years.
  7. Novelty – Some cars stay the way they are for years, while others are replaced or improved by the manufacturer every so often. Newer models have a better chance of holding their value over time.
  8. Size – Larger, more luxurious vehicles tend to depreciate faster because they cost more. They are also more expensive to operate and maintain.
  9. Fuel Economy – One of the reasons why diesel vehicles tend to hold their value better than their petrol counterparts is fuel economy. The more miles per gallon you get, the better.

10    Road Fund License – Cars that have high fuel consumption cost more to tax each year, making them less desirable in the second-hand car market.

 

How to Keep Vehicle Depreciation to a Minimum

Here’s what you can do to lessen the impact of depreciation on your vehicle and make use of it for a very long time.

  • Keep mileage low.
  • Take good care of your vehicle.
  • Repair any damage as soon as possible.
  • If possible, buy a more recent car model.
  • Avoid racing modifications such as spoilers, wide rims, and flared wheel arches.
  • If you need to sell your vehicle, wait for the right time of the year. Convertibles are popular in the summer while 4X4 off road vehicles sell well in winter.
  • Do not repaint with outrageous colors.
  • Consider leasing instead of owning. This way, you won’t have to worry about depreciation as it will be included in your monthly statement.
  • Look up how far a car’s value has gone down before buying.
  • Have the right features like metallic paint and leather interiors for executive cars or a GPS system and air conditioning for regular everyday vehicles.
  • Keep your car’s complete service history.
  • If you can, sell your car before its replacement model hits the showrooms.

 

At the end of the day, vehicle depreciation is inevitable. But follow the tips mentioned above and you can stave it off and get more value for car when you decide to sell it.

Identifying a Flood-Damaged Vehicle

Flood damage is hands down one of the worst things to happen to a vehicle. It’s unfortunate that there are still plenty of flood-damaged cars in the second-hand market today. If recent experience is any indication, heavy rains and floods are as much a part of British winter as hot tea or Santa Claus.

Floods cause damage to property, and that includes the family vehicle. You’ve most likely seen pictures of cars nearly submerged in flood water on the internet, rendering them virtually useless. These water-soaked vehicles are extremely dangerous to drive, if they even run at all, and have absolutely no business being in the second-hand vehicle market.

The AA had previously warned buyers of the dangers posed by flood-damaged vehicles, citing that catalytic converters and exhaust systems can be seriously damaged, and that wheel bearings could be completely locked up. In addition, the brakes, alternator, and the starter motors could fail. Water damage can also lead to serious electrical and electronic problems, such as airbags going off unexpectedly, or not deploying when you need them to.

Below are some of the measures you can take in order to avoid buying a flood-damaged second-hand car.

  1. Watch out for dank smells. Drying out a flooded car properly is close to impossible, so be sure to sniff for any damp or musty odors. If you come across a used car being sold with its windows open, be extra cautious as the seller might be trying to conceal the tell-tale smell of flood damage.
  2. Feel for damp spots. Water usually accumulates in areas such as the footwells, the boot, and the spare wheel well, so it’s a good idea to check any carpets in these areas for signs of dampness. It is possible for carpets placed in these areas to still be a little wet weeks, even months after the car was flooded. Also, look for interior tide marks that appear if the car was in water for a long time.
  3. Look for signs of rust. If the car appears to have more rust than it should have for its age, it could be an indication of flood damage. Check under the bonnet and on the underside of the car as these are the places that are most likely to have been under water if the car was indeed flooded. Water can also wash debris and silt into the vehicle, so look for mud or sand in unusual places.
  4. Check the electrical system. Water and electricity make for a horrible combination, which is why flooded vehicles are likely to have issues with their electrical systems. Make sure that all the lights and the audio system are working, and that there are no warning lights flashing on the instrument panel. There should also be no water trapped in the car’s lights. One or two electrical components failing isn’t an indication that the car is damaged, but it should serve as a red flag.
  5. Check the oil. The AA recommends looking at the oil built up under the filler cap when checking for possible flood damage. If you see a white deposit there that sort of looks like mayonnaise, it is possible that there was water in the engine, which is bad.

  1. Ask the seller. If the car is being sold from flood-stricken areas, be sure to talk to the seller about the vehicle’s history. Even if his story checks out, inspect the vehicle or have an expert do it for you to make sure that it doesn’t exhibit any sign of flood damage.

The Most Inexpensive Types of Cars to Run

Cars aren’t the cheapest investments anybody can make. But determining what the “cheapest” car is does not always mean you have to look at the price tag. You also have to figure out how much it would cost to keep the car running. If you’re looking to buy a car that is low-cost and relatively easy to maintain, here are a few determining factors to look into. The data in the list below has been studied and verified by numerous automotive experts. Use this as a car-buying guide to find the most cost-effective solution that suits you.

A smaller engine might be a better option. A larger engine will always burn through more fuel compared to a smaller one. If your primary concern is to reduce fuel consumption, then a car with a small engine should be your best choice. However, low fuel consumption also means low power. If you’re looking for an everyday driver that you can depend on to do the heavy lifting or keep up with those speedster on the freeway, you might be better off buying a car with a bigger engine.

Cars that run on petrol can be cheaper than those that use diesel. While diesel engines can be more economical than their petrol-fueled counterparts, vehicles that run on diesel are usually more expensive to buy and maintain. You might be spending less on fuel, but in the long run your repair and maintenance costs will pile up, costing you more than what you would’ve spent with a petrol car. Again, this will depend on how you intend to use your car. Remember that the more often your vehicle is used and the more work its engines put in, the more likely it is to break down.

Manual cars cost less than their automatic versions. Go to any auto retailer and you’ll see that a car with manual transmission will almost always cost less than the same model with automatic transmission. This is usually because automatic transmission vehicles are easier to driver, while manual transmission vehicles require you exert effort into switching gears. This sometimes causes the vehicle to stall, however, thus consuming more fuel. Many of the newer automatic models have been designed to be more fuel-efficient, so you should easily make back the added cost over time.

 

Hybrid cars are pricey, but are also inexpensive to run. Coming in all shapes and sizes, from super minis to luxurious SUV’s, hybrid cars are the epitome of fuel economy. They have very low diesel or petrol consumption because of the fact that they can also run on electricity, which is one of the least expensive alternative energy sources available today. However, the technology used to keep these semi-electric vehicles run isn’t cheap; which is why most hybrid cars cost more.

 

Fuel emissions are costly. Carbon dioxide emissions not only take a huge toll on your health and on the environment, but they also lead to higher road tax. You won’t have to pay excise duty if your vehicle produces less than 100g of CO2 per kilometer. To put this into context, a Volkswagen Golf will set you back £30 a year in excise tax. Be sure to research vehicle excise duty rates and learn how to compute for how much you would have to pay in taxes before buying your next car.

 

  1. Smaller cars are less costly to insure. The cheapest cars to insure tend to be the smaller ones, according to a research done by the Motor Insurance Repair Research Center in Thatcham,. The study further shows that apart from size, vehicles that cost less to insure are also similar in terms of performance, safety features, retail price, and the cost of aftermarket parts.

Sure, buying a new car is a major investment. But remember these factors and you’re sure to find the most inexpensive and the most cost-effective vehicle in the lot.