Getting a Car Loan for a Private Seller Car Purchase
Buying from a private seller can mean a better price. But it can also mean another hoop or two to jump when it comes to getting a car loan.
Many people look in their local Classifieds, or even online, for cars. When you buy a car from a regular person, rather than from a dealership, it is called a private party sale. The private seller often sells cars for less than dealerships, and he or she may be willing to negotiate more on the price. However, you might have a harder time getting the financing for the car. When you buy from a private seller, there are some extra things that you have to do when getting a car loan from a lender.
Not dealing with a dealer
While it can be nice to buy from a private seller rather than from a car dealer, you will not be able to take advantage of special financing options offered by many auto dealers. This means that you have to show up to the private seller with the cash in hand. For most people, this means going to a bank and applying for a loan and then leaving with the cash to pay the private party.
Getting a private party car loan
It is possible to get a private party car loan from a bank. You will need to let the lender know that you plan to purchase a car from a private seller. You might have to have the car examined by a mechanic and the results brought back. Additionally, the insurance company and lender will want to document the condition of the car. If you need to borrow a relatively small amount, there usually is not a problem, and you can take out a personal loan, or a signature loan.
Being on your guard
It is a growing trend for unlicensed auto dealers to pose at private party sellers. This way they do not have to worry about a business license. However, this can mean trouble for you, as there could be shady business practices involved. If you see quite a few cars for sale from one private seller, that could be a tip-off that you are dealing with an unlicensed car dealer.