Car pawn versus logbook loan
Car pawn is similar to logbook loan. In both cases vehicles are used as a collateral. Moreover, these two options are most often used by people who have high risk of lending elsewhere because of insufficient income or bad credit history. Because of that both of these borrowing options are considered being very risky as there is a high chance of inability to repay the debt and that the vehicle will pass to the lender’s possession.
Moreover, either logbook lenders or car pawning firms require the borrower to surrender original logbook to them for the period of debt. However, here some major differences can be noticed. By taking out logbook loan the individual needs to surrender only original loan, however if the car pawn is used he has to give away for the debt period his car and also has to surrender additional documents (copies of MOT and insurance and any Service books) and to provide the lender with spare key. Thus, by using car pawn the borrower must give away much more compared to the usage of logbook loans.
However, as an individual needs to surrender much more, he also takes out the debt with smaller interest costs. Those, who borrow from logbook loan companies companies tend to pay an interest rate not lower than at least 100% -120% a year (8,5% -10% a month) and APR usually varies from 400% to even more than 2000% (this means that average borrower tends to pay very high additional costs), while car pawn users usually pay 5% --10% a month (60% --120% a year) with APR of up to 70% -80%.