Registration loans defined
I had a customer email me the other day asking me all about registration loans and how they are different from title loans. Thought this was a great question and this post is meant to help clear the air about this issue and educate a few of you on what exactly all these terms mean.
A while ago the State of Arizona came down hard on title loans and this left the industry scrambling. There was actual talk of making it harder on title loan lenders but the BIG change was that they hit the payday loan industry (about 20 times larger than title loans) hard… basically effectively removing them. The Department of Financial Institutions regulate title loan companies in Arizona but so does federal lending laws.
We all know that you simply cannot remove an entire industry because you don’t like them, especially if millions of people use them… so registration loans was born.
This type of loan is not a title loan because it does not mean you have to have your title… just your vehicle registration. But if you look closely, it LOOKS like a payday loan, it has basically the same requirements as a payday loan but the exception… you have to have your registration to a car. This also means your car does not have to be paid off.
The amount of your loan is about what is offered by a payday loan
I know what you are thinking here. Registration loans are the step child of payday loans and you may be right.
This term is used for EITHER a title loan or an actual pawn where you leave the car with the pawn shop. Since most people do not want their car left at a pawn dealer and they would much rather drive it themselves, consider anything that says auto pawn to actually be a title loan lender BUT I would ask the lender beforehand about this.
PINK SLIP LOAN
A pink slip loan is most known in California because the title to the car is actually pink with a blue border. Thus the words… pink slip loan. Tricky huh.
Installment loans aka personal loans or signature loans are not secured by anything. They are loans but the difference is they carry higher interest than a bank. Why is this? Because banks want you to have a high credit score and these types of loans are usually for people with marginal credit scores. Still, nothing to secure here, they are UNSECURED loans but carry a higher than normal interest rate. Title loan leaders may offer this product so you want to ask if your car does not qualify.
I hope this helps you understand the terms but more importantly you can choose the right loan that you need right now.