Editor's choice: Carvana
- Most credit types welcome
- 45-day preapproval
- Seven-day guarantee
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Convinced buying a car from a private seller is right for you? Follow these steps to secure financing:
A private party auto loan is a type of used car loan you can use to buy a car from an individual, rather than a dealership. Since lenders consider it a riskier purchase, these loans often come with higher rates. It can also take longer because you have to transfer the title yourself — though you’ll likely save on the fees a dealership would charge for this service. If you’re buying a car with a loan the current owner hasn’t fully paid off, that can also take some extra time.
You can get a private party auto loan from some car loan providers. If you’re interested in an online lender, look for one that doesn’t require you to buy from its network of dealerships like LightStream. You also might have better luck with a local or national bank like PNC Bank, Wells Fargo or Bank of America.
Generally, you need to have an idea of the car you want to buy before you apply. Once you know how much you’ll need to borrow, compare lenders to find the most competitive deal you’re eligible for. After you apply and get approved, the lender sends the funds to your seller and you can begin the process of transferring the title. Repayment starts as soon as the loan is issued.
Though you can often nab a lower sticker price by buying a used car through a private seller, you may get stuck with less-competitive rates and terms on your loan.
Each lender has different eligibility requirements, though you typically must:
Because lenders often consider buying a car from a private seller riskier than going through a dealership, finding a private party auto loan with bad credit can be tricky — it’s a double risk. You might have better luck using an online connection service, though make sure you’re not working with one that specializes in dealership financing.
You also might want to save for a down payment, since it’s typically easier to get approved for smaller loan amounts. And like with other bad-credit loans, you’ll probably end up with a higher interest rate.
Keep these pointers in mind when buying a used car from a private party:
If your seller hasn’t completely paid off the car loan, you’ll have to get their lender to release the title to your name. This can take a couple of weeks or longer. In some cases, the seller might be able to pay off the loan up front. But if they can’t, your lender might need to work with the seller’s lender to make sure both loans are paid off.
Read our guide about buying a used car with an outstanding loan to learn more.
Getting a car loan for a private party vehicle can be more expensive and take more time than financing a car from a dealership. But the potential savings on the actual price of the car might just make it worth it.
Learn about other car financing options by reading our car loans guide.
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