You have found a car of your choice outside a dealership but can’t pay in cash. Then applying for a private-party auto loan is the next step. A private-party auto loan is a type of loan that allows you to borrow money to purchase a car from a private seller. If you want to finance your next vehicle without going to a dealership, then this is the right loan for you.
Cars are much less expensive when you get them from a private party instead of a dealership. And this is where this auto loan gets to help you. It is the best way to find a vehicle at a very comfortable price. Just like with traditional car loans, the car you are financing will help secure the private-party car loan.
Compared to unsecured loans, secured loans tend to have lower interest rates. The lender will repossess the car (collateral) if you don’t meet the payment agreement. Just so you know, most lenders offer terms of up to 12 to 84 months on these private loans. The longer the loan term is, the higher the interest you may have to pay. But the smaller your auto loan payment will be per month,.
What can Affect my Private-Party Auto Loan?
There are certain factors that can affect your interest rate. Some of these include the amount you are borrowing, the credit score, the lender you choose, the value of the car, the loan term, the vehicle’s age, and the vehicle’s mileage.
How to Qualify for a Private Party Auto Loan
Qualifying for these loans is very similar to qualifying for a dealership car loan. You will need enough income and a good credit score to cover your monthly payment. You may need a download payment. However, most lenders provide 100 percent financing on used auto loans. They may even provide more than 100 percent of the vehicle purchase price in order to help you cover license fees, title, and tax.
Currently, the average credit score for purchasing a used car with an auto loan is about 671. It is very unlikely for you to qualify with a score of over 500. However, you can check out lenders that give out auto loans for individuals with bad credit.
How Can I Find a Private Party Auto Loan?
Banks, online lenders, and credit unions give out these types of loans. However, they can be very hard to find. However, to help you get started, here are some financial institutions that offer these loans:
The Best Lender For Private Party Auto Loans
- Southeast Financial Credit Union
- Navy Federal Credit Union
- PENFED Credit Union
- MyAutoLoan
- PNC
- LightStream
- Bank of America
- Alliant Credit Union
- Digital Federal Credit Union
It also won’t be a bad idea to check out a credit union or bank that you have relationships with already. Keep in mind that if the car you want to purchase is too old or not worth much, you may find it very difficult to find a private-party car loan. Personal loans can help you provide financing in this case.
Should I get a Private-Party Auto Loan?
This loan can be a good option compared to unsecured personal loans. Unsecured personal loans do have very high rates because the car is not backed up by collateral like a car. Nevertheless, getting this type of loan is a good option if you find a car you love outside of a dealership.
How can I Apply?
To apply for this loan after choosing the right lender with the best rate, you will need to fill out an application. You will be prompted to provide certain information about the car, which may include the model year, mileage, vehicle identification number, and make and model. You will also be asked to provide your personal information, such as your employment number, address, social security number, address, and income. Keep in mind that the information you need to provide will depend on the lender. The lender will check this information along with the credit score. They will determine whether you qualify for the loan and what the terms and interest rate will be.
Once you have chosen the loan, you will also provide other information and documents, such as the bill of sale, a payoff quote, the vehicle title, and the vehicle registration. You may need to get a check for the amount agreed that is made out to the seller, depending on the seller. Or the loan amount will get deposited into your back account after the loan agreement closes.
Tips To Applying For A Private-Party Auto Loan
This type of loan works in a very different way from a traditional car loan for a car purchased at a dealership. Here are some details you need to keep in mind when considering this loan:
- Ensure you choose the car before taking out a loan.
- Make payment on any existing loans on the car.
- Make sure you manage the title transfer yourself.
- Prepare your mind for high auto loan rates.
- Avoid dealer fees.
- Proved all necessary information to the lender
If you want to apply for this loan, you need to keep all of this information in mind. Also, do more research before applying for the loan.
Conclusion
Private-party auto loans are very easy and a quick way to purchase outside of a dealer ship. Although they are not very common, you should still be able to find good rates and competitive options from different lenders. And since the vehicle sale prices are very cheap compared to those at a dealer shop, you will be able to save more. It is a win-win situation. You will be able to get your dream car and pay a very low price for it. Apply for the loan today and purchase your dream car.