What is a Car Title Loan?
Car title loans, sometimes called pink slip loans or auto title loans are short term loans designed to provide consumers who own their cars with immediate funds. Car title loans usually require repayment within a period of two to 4 weeks (some may last as long as 36 months) with high interest rates so they should only be used for short term, temporary financial difficulties.
The term, “auto title loan” or “car title loan” is due to the practice of giving the lender the title to your car as collateral for the loan. If the loan is not repaid on time you risk losing your car. Auto title loans are also known as “pink slip loans” in some states because of the actual color of the car title (pink). Car title loans should not be confused with payday loans; they are two different animals.
The ultimate penalty for not repaying a car title loan is repossession by the lender. Before it goes that far however, most car title loan lenders will attempt to contact the borrower and collect payment or make suitable arrangements. Because the car title used as collateral is usually worth at least twice as much as the loan on the car, boat, motorcycle, boat, or RV, most borrowers do everything in their power to preserve ownership of their vehicle.
Unlike typical pawn shop agreements where the pawn broker takes possession of the collateral during the loan, borrowers maintain possession of their car and continue to operate their auto as they repay their car title loan.
Recovery of a car involved in a car title loan in which the pink slip owner fails to make the payments is becoming easier in today’s marketplace. The use of GPS systems (global positioning systems) that reveal a car’s position at all times in conjunction with starter interrupt systems are making it extremely difficult for car title loan consumers to avoid having their vehicle repossessed.
Many car title loan companies have two types of loans available. With Title Loans (also known as Pink Slip or “You Drive” loans), you can still keep your car to drive. With Storage Loans (also known as Auto Pawns), your vehicle is stored in a secure facility. Generally, the auto pawn consumer makes NO payments until the vehicle is picked.
Car title loans are approved in a matter of minutes regardless of credit history. A consumer’s credit report and credit history have zero bearing on receiving approval for a car title loan. The factors that do play a role are:
1) The consumer must have a job or guaranteed income
2) The consumer must have the title to their car (or the loan proceeds must be partially used to pay off any leins on the car).
3) The consumer seeking a car title loan must have the ability to pay back the loan
4) In most states the consumer must be at least 18 years old.
A typical car title loan In the state of California, for example, means you can borrow cash on the value of your auto title [pink slip], with your vehicle serving as collateral to the loan. Your credit rating or score isn’t a factor in approval, and you can borrow anywhere from $2,600 to $50,000. Your application and the loan process is kept very private and it takes less than one hour to have your cash in hand. And no matter your reasons for needing—or wanting—the money, no one will bug you with questions as to your reasons or plans for the money. In California, car title loans are typically made or arranged pursuant to a California Finance Lender’s License