How Pink Slip Loans Work

What You Need to Know

You’ve probably heard the term “Pink Slip” mentioned before. It’s an older term that’s not often used anymore. The pink slip is just another word for your vehicle title. Rewind a couple of decades ago, and all car titles had a light pink color that made them easy to identify. Now, there are only a few states that still issue these pink-colored title sheets. It’s just as common to see blue, green, and white.

California was the first state to issue vehicle titles that were printed on pink paper, coining the “pink slip” term.

However, the term is catchy and many people still refer to title loans as a “pink slip loan.” If you’ve been considering taking out a title-backed loan for some quick cash, then this article is for you. We’re going to spend a few minutes giving you the low-down on how you can qualify and what to look out for.

What Is A Pink Slip Loan?

The “pink slip” is your vehicle title. It’s a small, notarized sheet of paper that proves that you own your car free and clear. It’s proof that you’re not still paying it off and that it belongs to nobody except you. If you ever want to sell, scrap, or use your vehicle as collateral on a loan, you’ll need to have your title in-hand.

A pink slip loan uses your car’s title as collateral to incentivize you to pay back the amount borrowed. They’re easier to obtain than traditional bank loans because they don’t require extensive credit checks. Lenders are guaranteed to get their money back one way or another, so there’s less risk on their end.

Most pink slip loans are issued in California, specifically Los Angeles, San Diego and San Jose.

These loans are usually equal value or less than the market value of your vehicle. When you take out a pink slip loan, the lender will put a lien on your title and assume temporary ownership (although you’ll still be able to keep your car). Once you pay the loan off, they’ll remove the lien and you will resume full ownership of your vehicle.

How Do Pink Slip Loans Work?

Pink slip loans are incredibly easy to obtain. All you have to do is prove that you own a working and insured vehicle. Additionally, you may have to prove that you have the means to pay back your loan in a timely manner.

That’s it.

No credit checks, no background checks, no two-week approval process. Just a job and a car. Obviously, there’s a bit more that goes into it, but essentially that’s all there is to it.

When applying for a pink slip loan, you’ll first need to get your vehicle appraised. Based on your car, the lender will approve you for an amount based on the Kelly Blue Book value. You can either take out this amount or take out less depending on your individual need.

After they’ve appraised your car and validated your proof of insurance, you’ll be asked to provide proof of income. Finally, they’ll need to see that you’re at least 18-years-old and a U.S. citizen with your driver’s license and social security number.

Proof of income can be anything from pay stubs to bank records of deposits. Employment is not necessary.

Once you’ve been approved, they’ll set you up with a repayment plan (usually 12 months or less) and cut you a check or direct deposit the money into your bank account. In most cases, you’ll be able to get your money the same day or at least by the next business day.

Lender Requirements

Pink slip loans are very easy to qualify for. They were designed to be a quick and painless way to get the money. You’ll qualify whether you’ve got good credit, bad credit, or no credit. There isn’t much that you’ll need to bring either. As long as you own a vehicle and have a steady job, you’re pretty much guaranteed approval. Here’s what most lenders will require from their borrowers:

  • Vehicle (in working order and with title in-hand)
  • Insurance and valid plates on the vehicle
  • Your personal information
  • Proof of income

Comparing the Alternatives

In days past, if you needed to borrow money and you didn’t have a wealthy uncle, your only option outside of mob-enforced loan sharks was to ask your local bank or credit union for a loan. They would perform an extensive background and credit check on you, and then send it up the their superiors for “further review” that could take weeks at a time.

Needless to say, it was a pain. Most people in need of a small loan don’t have that much time to waste sitting around and waiting for approval.

With a pink slip auto loan, all you need to do is prove that you own your vehicle free and clear and that you’ve got a job to pay back the loan. You can usually get your money the same day, you don’t have to undergo embarrassing credit checks, and many lenders will even approve your loan online so you don’t even have to leave your home.

Legal Regulation

Depending on where you live, lending laws may vary. Some states have loan amount caps, age limits, and service-based restrictions dictating who may take out a loan and how much lenders can approve you for. Here are some of the legal regulations that you may encounter:

  • Limits on APR and fixed interest rates
  • Some states don’t allow military to take out title loans
  • All borrowers must be at least 18 years of age
  • Borrowers must be U.S. citizens


As long as you have a way to pay your lender back, a short-term pink slip loan is a great way to get the money that you need in a pinch. While their interest rates may be a bit higher than traditional bank or personal loans, you’re guaranteed approval and you don’t have to wait for your money.


“A Pink Slip”, The Economist, 2016,