What lending options do I have if I want to use a pink slip for collateral?
We know there are many lending choices available to those who need short term cash. You can apply with your bank for a personal loan or contact your local credit union to see if they have any low interest funding options. Some consumers with bad credit will seek out payday loans and or cash advances as a way to meet a short term cash crunch. There’s always the option of borrowing money from a friend or neighbor, but sometimes that can lead to stress and problems down the road. All those different choices contrast with what you can do with a free and clear pink slip. Most applicants already now they can access cash by using their vehicle equity as collateral. Even though a car title loan is synonymous with quick cash, did you know there are multiple financing options available? It all depends on a few important factors. For example, what’s your current credit situation? How much equity do you have available in your car? The most important consideration is what state you live in. Some states don’t allow any type of short term lending. Other states will require you to apply for different loan options. Let’s break down the different choices you have.
The most widely used and common method of financing is a typical car title loan. With a car title loan a borrower is using their pink slip to guarantee a loan. The borrower needs to show sufficient equity and they can’t have any past liens or current bankruptcies. Like a payday loan or installment loan this method of borrowing has high fees and interest rates. But you’re able to borrow a large amount of money and you can pay off the loan proceeds early to avoid costly finance charges down the road. With a traditional equity loan you hand over the pink slip to your lender and they keep it for the life of the loan. What’s important to note here is that you can keep driving your vehicle. Most online lenders these days will be fine to hold your vehicle title as collateral while you have the loan. Anyone that owns a car with a free and clear title can apply for next day funding. You can use our online application and get a funding decision that same day. It takes a few minutes to apply and we typically provide an underwriting decision in less than an hour.
Another loan option is a vehicle pawn. With a vehicle pawn you’re going to hand over your pink slip, keys and vehicle to the lender as forms of collateral. We don’t see this financing option much anymore because a traditional car title loan is simply better. Who wants to take out a loan but hand over the automobile at the same time?
It will be hard to make monthly payments if you can’t drive to work or do other things. We still see a few companies in the south that provide this type of funding. Most are legitimate retail pawn shops and a vehicle pawn functions much the same as what you would expect with other items. As an example, you can get cash for a diamond ring or any other expensive item. Same is true in this case if you pawn your vehicle to pay for emergency expenses.
Decide between a title loan or vehicle registration loan
Some states allow what called a registration loan. With this type of online funding you can receive cash even if you have an existing lien. For instance let’s say you needed to borrow a few thousand dollars. It’s going to be difficult to qualify if you still owe your bank or lender for the initial amount you borrowed to pay for the car. A registration loan provides a solution for this. You can still get cash for vehicle but you don’t need to turn over the pink slip. Most registration loans are written for less than what we often see with a normal title loan. The amount you borrow will depend on your overall financial situation and of course the vehicle history and condition. This form of financing is not seen in most states so check and see what you have available in your area. We see registration loans written all the time in Arizona. To qualify you’ll need to provide current AZ registration, a bank statement and other relevant information like proof of income. Most lenders will also want to see that you have a checking account.