Pink Slip Loans
At Title Loanser, we specialize in the matching lenders and borrowers of pink slip loans. We are not a lender ourselves, though we connect United States citizens who are trying to get pink slip loans with lenders that are part of our well-built, extensive network of lenders.
What is a pink slip loan?
First, let’s talk about the basics of loans and how they work.
As you probably already know, incurring risk is an inherent part of lending money. In order for lenders to have a chance of making money in their pursuits, they need to charge their borrowers more money than however much they lent out in the first place. This is because some borrowers, by nature, are not going to repay their loans on time or will only pay back part of what they borrowed.
Lenders use interest rates and upfront fees to determine how much money their borrowers will be required to pay lenders back to satisfy their debts. They also ask borrowers to sign over the rights to some or all of their most valuable assets in the event that they default, or fail to pay. The assets that are signed over to lenders in such cases are collectively known as collateral.
Now, it’s important that you understand what pink slips are.
Pink slip is a North American term that usually either refers to the document that employers provide to employees who have recently been fired. Although not all such formal notices of firing are pink, the term “pink slip” is still often used. In some cases, pink slips are used to refer to car titles, which are documents provided to American vehicle owners by their state governments. Even though these formal government documents are printed in all kinds of colors and color schemes, they are still sometimes called “pink slips.”
In this case, the term refers to the latter example of pink slips – car titles.
Without further ado, here comes the answer to the initially-asked question.
A pink slip loan is a secured loan that is backed by one or more motor vehicles that borrowers own. These loans, which are a type of vehicle loan, are usually used to repair the vehicles that they’re taken out against.
How are pink slip loans different than other loans?
In the early days of the United States banking industry, financial institutions were more oriented toward their local communities. As such, they’d sometime lend money to trusted community lenders at very low interest rates – if they even charged anything on those loans in the first place – and at the absence of financing fees. Collateral was much less frequently asked for in the past.
Today, seeing that taking on consumer debt is such a normal part of most people’s lives here in the United States, people are also less likely to pay their debts back to lenders’ standards. As such, collateral is required for loans much more frequently in today’s world of banking.
Pink slip loans, by definition, are loans in which vehicles are put forth as collateral. Unlike other types of loans, pink slip loans require borrowers to offer one or more automobiles of substantial market value to lenders.
You may be more familiar with the term title loan, which is another term that’s used to refer to loans backed by motor vehicles as collateral. Car title loans are the same thing as pink slip loans.
What kinds of vehicles can be offered as collateral on pink slip loans?
Many Americans lease their vehicles, which means they pay money to lenders to use them as if they own them, even though they don’t actually own them. Further, Americans often seek out financing to purchase cars and trucks with. In both cases, these vehicles can’t be used as collateral to satisfy pink slip loan lenders’ requirements.
In other words, the only vehicles that can legally be offered to pink slip loan providers are those that are truly and fully owned by applicants. A common phrase used to refer to this is free and clear. When used in this capacity – vehicles that are owned free and clear – it means that the pink slip loan applicant is the only owner who is listed on those vehicles’ official ownership documents that are provided by the relevant state governments of wherever their owners live in the United States.
As far as the make, model, and condition of vehicles themselves are concerned, applicants are more likely to be approved for pink slip loans when they vehicles they offer as collateral are highly valuable, new, in good condition, or in high demand.
How much are pink slip loans usually worth?
Assume that Bob is extended a pink slip loan to the tune of $10,000. Bob avoids paying the lender back. The lender is now forced to factor the debt off or take a loss on the loan.
Since financial institutions and alternative lenders alike are well aware of this potential outcome, pink slip loans will only be as great as the value of the vehicle that borrowers offer as collateral.
For example, if Jim seeks out a pink slip loan and offers a 2012 Chevrolet Suburban as collateral that is appraised at $10,000 market value, Jim can only receive a loan offer of $9,999 or less.
How is the market value pink slip loans determined?
Kelly Blue Book is a company that objectively determines the value of various makes, models, conditions, and other types of motor vehicles using a variety of criteria. The company has been publishing physical copies of the Kelly Blue Book in 1926. Today, most people use Kelly Blue Book’s website to determine the approximate value of motor vehicles.
Due to its history and long-standing reputation as a trusted source in the valuation of vehicles, Kelly Blue Book is usually the first entity that lenders of pink slip loans consult in determining the market value of the vehicles that prospective borrowers offer to them as collateral.
Another popular vehicle valuation tool that is used by modern lenders is Edmunds’ online valuation tool. Although Edmunds, which was founded in 1966, hasn’t been around as long as Kelly Blue Book, its valuations are considered to be accurate in the vast majority of vehicle evaluation cases.
Lenders usually lean toward the conservative estimates for pink slip loans and car title loan buyouts that Kelly Blue Book, Edmunds, and professional vehicle appraisers provide as a safety precaution. The more conservatively these vehicles’ market values are appraised at, the less risk that lenders incur in providing pink slip loans.
At Title Loanser, we strive to be here around the clock to help you seek out pink slip loans and get approved for them.