Private Party Car Loans For Good & Bad Credit

How is a private party car loan different from a regular auto loan?

If you use a personal loan to finance a private party car purchase, there can be differences compared to a secured auto loan. 

• Collateral: Traditional secured auto loans require collateral. The vehicle being financed is typically the collateral. Therefore, the vehicle needs to meet certain criteria. However, if you use a personal loan no collateral is required. Instead the loan is based on the borrower’s creditworthiness or likelihood to repay. 
• Down payment: Traditional secured auto loans can require down payments. Since the vehicle is used as collateral, a down payment can give the lender more equity in the deal. However, if you use a personal loan, there is no down payment required. 
• Funding: To obtain funding for a traditional secured auto loan, you’ll need to provide the vehicle details in most cases. Typically, you’ll go shopping with a pre-qualified offer, and once you’ve found the vehicle you want to purchase you’ll submit the details to receive approval and funding. However, if you use a personal loan you can receive funds upfront that can be deposited right to your account. 

Can I get a private party car loan with bad credit?

Obtaining a private party car loan with bad credit can be done. Chances are you’ll have a better shot at qualifying for a secured auto loan. Loans that are backed by collateral can reduce the risk for the lender some. In the event the borrower falls behind or defaults on the loan, the collateral (in this case the vehicle) can be seized and sold to recoup any losses. In addition, with a secured auto loan you have the opportunity to provide a down payment to reduce the risk for the lender even more. The bottom line though is that you can increase your chance of approval, and expand your options by boosting your credit score before applying for a loan. 

Is a down payment required for a private party car loan?

If you use a personal loan to purchase a car private party, no down payment is required. However, if you use a traditional secured auto loan a down payment can be required. 

What interest rate can I expect for a private party car loan?

The interest rate for a private party car loan can vary depending on several factors. Let’s review. 

• • The vehicle (secured auto loan): If you’re using a secured auto loan, the loan will be contingent upon the vehicle being financed. Oftentimes, lenders can offer better rates for newer vehicles. You’ll need to check with the lender to find out how you can save on interest by choosing the right vehicle. 
  • Down payment (secured auto loan): If you’re using a secured auto loan, you can offer a down payment. This can reduce the risk for the lender which may allow them to offer a better APR. 
  • Borrower’s qualifications: Loans that consider creditworthiness of the borrower (most loans) can use the evaluation of the borrower to determine the risk of the loan. Based on the level of risk, the lender can assign an interest rate. Typically, the more risk the higher the rate. 
  • The lender: While the borrower’s qualifications can impact the interest rate offered, offers can vary by lender. Some lenders may be more open to helping borrowers with bad credit, while others may have strict requirements that target good credit borrowers. Finding the right lender is important as you search for a loan offer that works for you. 

• Repayment period: A shorter repayment period can mean less risk for the lender. Therefore, they may be able to offer lower APR on a loan with a shorter repayment period. The opposite could apply as well, depending on the lender’s goals. It’s worth exploring the variables that can affect the interest rate with the lender to see how you can save.

Will a private party car loan affect my credit score?

A private party car loan can impact your credit score. First it may impact it negatively, but overtime the trend can change. Here’s why. 

During the approval process, the lender will likely perform a hard credit pull. This can negatively impact your credit score. Then once you’ve received funding and the loan has been reported to the credit bureaus, your utilization increases (hint: you’ve increased your debt load). This too can negatively impact your credit score. However, overtime if you make on-time payments you can build credit, and see your score increase. This is especially likely if you make additional efforts to boost your score alongside the private party car loan. The credit score impacts we just explained can apply to traditional secured auto loans and personal loans. 

What types of vehicles are eligible for private party car loans?

Personal loans remove the need for the vehicle to meet certain requirements in order for you to be eligible for the loan. Since they are not backed by collateral, you can request the amount you need and if approved, you can receive the funds as a lump sum. If you opt for a traditional secured car loan, the lender can determine the types of vehicles that are eligible. Requirements such as model year or mileage can be used. 

Get prequalified for a personal loan to buy a car. . . check offers today!

See Also

• Truck Loans For Bad Credit
• Semi Truck Repair Loans
• Tow Truck Financing
• Car Repair Loans For Bad Credit
• Transmission Repair Financing