Pink Slip Loans, what are they?

What are  pink slip loans? If you remember the movie “Grease” you will recall guys racing for “pink slips”. And no we are not talking about ladies garments here either. Pinks slips refer to the owner’s legal title to a car. They are better known as car title or automobile titles. They are call pink slips since they are printed on pink paper.

What a pink slip loan is a loan against the value of you car (or SUV, truck). These loans are generally easy to get. Why? Because you are borrowing against the value of your car.

Since this is a secured loan by using your car as collateral, the lender is more likely to make this loan as opposed to an unsecured loan

Pink slip loans (also known as car title loans)are used by people with no credit or if they have bad credit. Most lenders will even loan you money even if you have a closed bankruptcy. Once again they will do this since you pledge your vehicle as collateral.

Now this can kind of sound like a pawn loan, but the difference here is that even though you have pledged your car for the loan, you still have the use of the car at all times. Now of course if you don’t pay the loan back, you can lose your car to the lender.

These types of loans should only be used for short-term cash needs. Most of the time these loans are for about 30 days. Some lenders will allow you to extend the term another 30 days.

These loans will typically have a higher interest rate than most loans. This is because the lender isn’t doing a credit check on you, all he is concerned with is the value of your car and if you have the monthly income to pay the loan off when it is due. The benefit is that a car title loans interest rate will be cheaper since the lender has collateral to protect his loan. But as stated earlier, if you fail to pay back the money, then your lender will repossess your vehicle and sell it at an auction in order to recover the banks money.

Finding a pink slip loan lender is easy to do. First you can always check your yellow pages for lenders. With the internet, many lenders now will allow you to fill out an application online, saving you the trouble of going to them to fill an application out.

The first thing the lender will do is appraise your vehicle. Before having the lender appraise your car, you should research it first yourself. This way you will know the real value of the car. By arming yourself with this knowledge, it shows the lender you have done your homework.

Finding the value of your car is easy. There are many places online to check the value. One of the most popular websites is Kelly Blue Book or KBB.com. This website is the bible of car values. Car dealers and lender use this as their main resource for valuing a car.

Lenders will generally lend you up to 50% of the value of the car, though a few may lend a higher percentage. You must hold clear title to the car. This means that there are no loans against the car at this time.

Depending on the state where you live, interest rates can range from just over 30% to 600%. Once again it pays to research your state laws so you know what to expect.

So there you have a brief intro to pink slip loans. And you thought it was referring to ladies loaning their clothes.