A pink slip, or cash-for-car loan, uses a loan-seeker’s ownership of a vehicle as collateral against a cash loan. The loan-seeker keeps the car for use while paying back the loan. These loans can vary in amount from $500 to $25,000 or more. The person applying for the loan must own the car used as collateral. Loan-seekers can apply for these loans at brick-and-mortar institutions and over the Internet. While these loans factor high-interest rates into the short repayment schedules, pink slip loans can provide funds in an emergency.
Narrow the list of potential lending organizations to those with licenses from your state or memberships in professional or consumer organizations, where applicable. California requires all legitimate lending institutions to acquire a license from the state. Some professional and consumer credentials include the Better Business Bureau and the American Bankers Association.
Look for organizations with multiple branches. These lending organizations have established a brand and are more likely reputable.
File a free credit score report before securing a pink slip loan. Your credit score will partly determine the interest rate and repayment schedule of a loan; you should not apply for a loan without knowing this number.
Shop for the best interest rate -- these rates typically vary depending on an applicant's credit score, but they also vary from one lending institution to the next. Pink slip loans can carry rates as high as 30 percent; this fee increases a $1,000 loan to a repayment of $1,300. A 20 percent interest rate would only increase the repayment amount on the same loan to $1,200.
Calculate the amount of cash you need in a loan and weigh this number against the value of your car. You can find the value of your car in Kelley Blue Book, the National Automobile Dealers Association or Edmunds, among others. Pink slip loan organizations may lend up to 120 percent of the value of your car.
Determine whether or not you can pay back the loan by the end of the lending period. Lending periods for pink slip loans last between 30 and 60 days; if you cannot pay back the loan by the end of that period, the lending organization may offer you an extended repayment period at a higher interest rate. If you do not pay back the loan by the end of that extended period, you forfeit your vehicle.
