A Guide to Pink Slip Loans

What is a Pink Slip Loan?

As the name suggests, a pink slip loan is a type of secured loan that allows you to borrow money from a lender using your vehicle’s pink slip as collateral. The term “pink slip” is an informal way to refer to vehicle titles, based on the fact that in some states, including California, auto titles used to be printed on pink colored paper.

Even though today, most car titles are not printed on pink paper stock, the term is still popular as a synonym for a vehicle title and proof of ownership, allowing you to use your car or truck as collateral when applying for a loan.

Pink slip loans can go by different names, including car title loan, auto equity loan, or auto collateral loan.

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How Do Pink Slips Work?

In order to get a pink slip loan, you need to find a pink slip lender, apply for the loan, and receive final approval.¹ Upon approval, you will need to send over the required documents such as a pay stub, proof of residence, and vehicle pictures. Once you sign your loan agreement, the lender will disburse your loan proceeds and you will need to surrender your vehicle title.

When you get a loan against your pink slip, the lender will place a lien on your vehicle’s title, but you can keep and use your vehicle while making your scheduled payments. When the loan is paid off, the lien is removed.

The repayment process and options for pink slip loans depends on the lender you work with – loan terms can range from as little as 30 days to 36 months or more.

If you have a pink slip to your car, you can apply for a loan and get cash in a relatively short period of time!

How Much Can I Borrow Using a Pink Slip?

Loans for pink slips can range depending on various factors, including the lender, the residence state of the borrower, the equity value of the vehicle and the borrower’s ability to repay the loan¹. Depending on the state, lender and specifics of the application, pink slip loans up to $15,000 or more can be available.¹

If you’re looking to borrow against your pink slip with a loan serviced by LoanMart, it is free to apply. Completing an application is the best way to find out how much you and your vehicle can qualify for! You can either apply for a pink slip loan online, or call our team of dedicated experts to walk you through the application over the phone.

Who Uses Pink Slips?

Loans for pink slips are primarily known for being fast, convenient and having less rigorous approval requirements than other loan options. Therefore, these loans are primarily attractive to borrowers who are facing an urgent or even immediate cash need, and borrowers who have less-than-perfect credit histories.¹

In addition, loans are available to applicants with varying types of income. Whether you are self-employed, employed by a company, unemployed or retired you may still qualify for a loan using your pink slip.

What Are The Pros and Cons of Pink Slip Loans?

Pink slip loans offer many benefits to consumers, but they also have some risks that you should be aware of if you are considering to use your car title to obtain a loan.

Pros

When borrowing against your car title, the primary benefits include:

• Flexible approval criteria: Since your car title is used to secure the loan, pink slip lenders can have much more flexible approval criteria compared to other loan options! As a result, you chances of getting approved for the cash you need can be better with this loan option.¹
• Speed: The entire process from application to funding can typically be completed as fast as same day.¹ This makes pink slip loans a potentially attractive option for borrowers who are facing an unexpected cash crunch.
• Continued use of the vehicle: Unlike other collateral-based loan option, getting a pink slip loan does not require the borrower to surrender the asset at the time the loan is made. Borrowers can continue driving their vehicle while repaying the loan.

Cons

The primary risk and potential downsides of borrowing against your pink slip can include the following:

• The cost of the loan: Pink slip car loans are not a low-cost way to obtain credit. Even though the vehicle title is used as collateral, the loans can be expensive, especially when compared to credit options provided by banks or credit unions.
• The risk of losing the vehicle: When borrowers default on a pink slip loan, they ultimately risk that the lender assigns the vehicle for repossession. If the repossession agent is successful in searching for the vehicle, the vehicle can be sold at an auction to pay off the loan balance.
• Additional fees: Placing the lender’s lien against the car title comes with a cost in all states, charged by the DMV, county respective equivalent. Lenders usually pass on the lien placement fee to the borrower. While many states have relatively low lien placement fees, ranging from as little as $4 in Arizona and $6 in Utah, states like Florida and Louisiana have high fees, going from around $75 to as high as $86.50. High lien placement fees can be especially disadvantageous if you are only looking to borrow a small amount of money.

While it’s important to be aware of these potential downsides to getting cash with your pink slip, it’s equally important to know how you can mitigate them! To minimize or avoid the risk of losing access to your vehicle, be sure to only borrow an amount that results in a payment schedule that you can comfortably afford! Ensuring that the loan payments fit with your monthly budget is a good way to minimize the risk to your vehicle. In regards to the cost of the loan, including both the interest and fees, your best bet is to shop around for lenders. Having multiple loan approvals for getting cash with your pink slip can help you identify the lowest-cost loan option! In addition, you can also consider the loan alternatives.

Alternatives to Pink Slip Loans

Before applying for funds with your vehicle, it can be worthwhile to consider some of the following alternatives so that you can make a sound financial decision:

• Credit card cash advance: If you currently have a credit card, you may be able to get the cash you need by borrowing against your existing credit limit. While the interest rate for credit card cash advances can be higher than the interest rate for purchases with your card, it may still be lower than the interest rate for a pink slip loan.
• Unsecured loan: If you can qualify for an unsecured loan, choosing that loan option can benefit you by potentially offering more competitive terms, and not needing to pledge your title as collateral for the loan.
• Borrowing from friends or family: If you have friends or family members who have the financial resources to help you out, borrowing from them might be a better options than applying with a lender.
• Non-credit options: If your need for financial assistance can be covered by other means, such as government assistance programs or funds through a non-profit, getting cash without applying for credit could even be your best option.

Conclusion

Applying for funds with your vehicle’s pink slip can be an option to consider if the benefits of this loan option outweigh the potential drawbacks, based on your specific needs and financial situation. Before applying, it’s a good idea to consider available alternatives to pink slip loans, which can potentially include not applying for credit at all!

If you decide that a pink slip cash loan could help you, shopping around to get the best loan offer, and only borrowing what you can comfortably repay are two strategies you can use to minimize the potential cons of using your title to get a loan.

Getting a loan serviced by LoanMart is as simple as ever. Apply online or give us a call at 855-422-7412.