Private party auto loans are one option for auto purchase financing. Private party loans often require thorough documentation.
But may be a more available and reasonable option for individuals with less-than-perfect credit history.
What Is a Private Party Car Loan?
A private party auto loan is a used car loan that allows you to finance a vehicle.
through a private party or individual in place of a dealership.
There are many advantages to opting for a private party loan, and depending on your circumstances it could save you a lot of money.
Private Party Auto Loan Advantages
Going with a private party car loan opens up several options to you as a consumer. There are a number of banks, credit unions and financial institutions.
With varying car loan rates all competing to service you.
The Internet is a great resource to compare rates from different companies, and there are online brokers that will connect you directly with an auto loan lender to give you a quote within minutes.
If you have bad credit, then a private party loan is probably your best bet. Because you can pick which loans to apply.
You can choose only loans that are accepting of people with a bad credit rating.
It’s important to realize that getting turned down on a loan can actually lower your credit score. You will also be able to find private party loans that do not require a down-payment.
However if possible it’s recommended to pay at least a little up front to lower your monthly bill.
Private party loans typically have shorter payback periods resulting in higher interest rates.
However, don’t be put off by this because you can actually end up paying more on a loan with a longer payback period even if it has a lower interest rate.
Also, with a shorter payback period It is more likely that your car will still be worth something when you are done paying off your loan.
Private party auto loans
These can also give you an advantage when negotiating with the person selling the car.
Used car salesmen working at dealerships are trying to sell several cars to multiple people on a daily basis.
This means that their knowledge of a car in question can only run so deep.
With a private party loan, you are typically dealing with the previous owner of the car so you should be able to get better information about the vehicle’s history.
Any problems you should be aware of before you buy it.
Another advantage in the negotiation process with private party loans is that you have to be approved before you make an offer for a car.
Therefore you already know your spending limit.
This allows you to take a hard stand with people when negotiating the price, you can afford to pay.
Whereas a dealer may try to persuade you to borrow more through their financial services.
Private Party Auto Loan Disadvantages
There are several disadvantages to this kind of car purchase loan.
One of the disadvantages of private party loans is the length of the loan term.
For auto purchase loans, the loan term length can be as long as six years. However, private party loans often are for a substantially shorter length of time.
Usually, a private party loan is offered for a maximum of four years or 48 months and very often private party loans are only offered for 36 months.
For a borrower who is looking for a much longer period to finance the purchase of their car.
Lower their monthly payments as a result – a private party loan can have serious disadvantages.
The ultimate result of a shorter loan term is that you are paying the same principal for the purchase of the car.
But you are paying a higher amount of interest.
This results in higher monthly payments, overall when compared to auto loans that are financed through a dealership finance company.
Another disadvantage of private party loans are the standard interest rates charged for these kinds of auto purchases.
Typically, car loans obtained from the dealership may have largely reduced interest rates.
Even offered at zero interest if certain restrictions and requirements are met at the time of purchase.
However, it is also possible to compare shop for favorable interest rates if a borrower is able to dedicate enough time to this task.
By using private party loans, borrowers eliminate their ability to take advantage of these incentives.
Which could be significant if they find themselves without a job and unable to meet their financial obligations as a result.
The entire process of purchasing a car usually involves a great degree of negotiation.
They offer specific and significant disadvantages when it comes to the length of the loan, interest rates and ability to negotiate those rates and monthly payments.
How to Research Private Party Auto Loans
.Use the following steps when conducting your research.
- Find lenders. Since the only difference between a private party auto loan and a traditional car loan is the fact that no dealer is involved, regular lenders will likely be able to supply you with a loan.
- The only lenders which are now out of the picture are captive finance companies, meaning that banks are still viable loan sources.
- Other options when looking for a private party loan are local credit unions. You may find them online or in a phone book.
- Submit loan applications. The lenders you find will be able to guide you through the loan approval process.
- You should be 18 years of age or older; have proof of income of at least $1,800 a month.
- Have proof of residence; not be bankrupt; and have a social security number. More may be required by certain lenders and they will tell you if this is so.
- Compare approvals. After submitting applications and getting approvals, you may compare them to find the best deals.
- Details to compare are loan rates, additional fees and any special options which you feel will be beneficial.
- See what kind of interest rates you can get. Researching private party auto loans can help you purchase a used car and save money on the loan for the best deal possible.
It may be crucial for you to take the following aspects into consideration as it will enable you to get a loan that fits your budget and needs.
- get accuracy of your personal credit profile checked and ensure that it is free from errors or mistakes.
- Additionally, plan a practically workable budget to make sure that you don’t default on your monthly car payments.
- Trust None, But Rely On Facts – Even if the owner of car, who may be your friend or relative, has told you everything about the car..
- Only you need to provide details of the Vehicle Index Number (VIN).
Requirements for Private Party Auto Loans
For enhancing chances of obtaining a quick approval for your private party auto loans request, you must make sure that you are:
- A U.S. citizen over 18 years in age and have a valid Social Security Number (SSN)
- Currently earning at least $416 every week or total $21,600 annually
- Working with present employer for last 1 year and residing in current home for past 6 months
- Not in an open bankruptcy or house foreclosure proceeding and there has been no car repossession during last 12 months
Where to Find Auto Loan for Private Party Lenders
The internet could be the right place to locate lenders that specialize in providing low interest rate private party car loan for bad credit situations.
You can get and compare multiple free proposals online for identifying the best lender for your circumstances. Research is the key for securing lowest interest rates.
How to Locate the Best Private Party Auto Loan for Bad Credit in Just a few Simple Steps
- Find Specialized Lenders – Finding lenders that specialize in offering loan finances for purchasing privately owned cars a much better proposition as compared to traditional loan dealers.
- Banks and credit unions or dealership financing loans.
- Submit Loan Application – While filling and submitting a private party car finance request online.
- You must attach proof for having stable and regular monthly income.
- Driver’s license, age, social security number, etc.
- Lenders will need these documents for processing your application for a low interest rate bad credit car loan.
- For private party purchase online.Ensure that you give all verifiable information.Compare Free Proposals– On submission of your bad credit auto loan request online for buying a privately owned used car,
- you will receive free non-binding quotes from multiple top rated bad credit private party auto loans lenders in the market that compete with each other for providing some of the best deals in business.
- Hence, by comparing them in detail, you could be able to find the most appropriate private party auto loan bad credit lender for your financial situation.
How to get guaranteed approval private party auto loans with bad credit history
You can finance your car with the help of guaranteed approval private party auto loans by looking up the internet for relevant information.
You may decide to buy the car from a friend or a relative of yours. However, you don’t have the required money for the same.
What you can do in this scenario, is knock the lenders dealing exclusively with the private party loans.
Qualification For Car Loans
Now, since the automobile industry has suffered a breakdown recently, lenders have become very rigid with the lending norms.
It might be difficult to get your hands on no credit private party auto loans. All these lenders now want is— an excellent credit history.
But a deeper search would lead you to professionals, who won’t even ask for a down payment.
However, it’s always advisable that you try and pay, at least, 20% of the amount you are borrowing.
In order to qualify for these loans you should be/have:
- 18 years of age (at least)
• With your current employer for at least 6 months
• Valid SSN
• No bankruptcy
• No foreclosure
• Earning the minimum amount as specified by the lender
• Living in your present residence for at least 6 months
It is advisable that you are securing due information about your credit scores before applying for the bad credit auto loans private party.
Your credit scores are a major determinant of your chances of getting a loan as well as the rate of interest on the loan (if you qualify for the loan).
Learn about the free online quotes, the online calculator— the way they function.
Compare the rates offered by different lender. Do backgrounds research on the reputation enjoyed by these lenders.
Beware of scamsters. There are a lot of fraudsters conducting business online with perfectly authentic looking websites.
Swindling hopeful borrowers after securing their information online.
Ask for your friends for suggestions. Go through neutral reviews of websites before settling for the loans.