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How To Get A Car Loan For A Private Seller?

happy family driving off with new vehicle private seller car loan

While purchasing a vehicle at a local dealership is a popular route for car shopping, it isn’t the only option. Sometimes a private seller will have just the car you want. There are many nice and reliable vehicles for sale from a private seller, and you can often find one for a reasonable price. 

But what if you don’t have the money in cash to pay for it? That’s when you want to get a private seller car loan. Every lender doesn’t offer these, but at Atlantic Financial Federal Credit Union, we help many of our members secure private seller car loans.  

Here is our guide for how to get a car loan for a private seller purchase and how it compares to buying from a dealership. 

What Is A Private Seller Car Loan?

A private seller car loan is a loan that you get from a bank, credit union, or other financial lenders to purchase a car from a person instead of a business. As with a traditional vehicle loan, it is secured since the vehicle serves as collateral for the loan. 

The primary difference between this loan and a traditional vehicle loan is that the conventional loan allows you to purchase from a car dealership instead of a person. With a private seller loan, you can buy a vehicle from a friend, relative, neighbor, or any other individual who is selling their car. 

Steps To Securing A Private Seller Car Loan

The process of obtaining a private seller car loan is very similar to what you need to get a traditional car loan. 

Select Your Car

The first thing you want to do is find the car you want. It’s essential to do this first because the lender will want to know details about the vehicle, including the VIN, make, model, mileage, etc. 

Research Loan Providers

Since not all lenders finance private seller car purchases, you want to research lenders that can provide you with the financing you need. Once you determine your top three lenders, you can move to the next step, which is completing your application. 

Apply For Your Loan

After you decide that you want to purchase a car from a private seller and find the vehicle you want, you have to complete the application process. 

The process of applying for a private seller car loan should be reasonably straightforward. You will have to provide your necessary personal information and details related to your income and employer. Also, you will generally need to let the lender know details about your vehicle, such as the VIN (vehicle identification number), make, model, mileage, etc. 

The reason to select your top three lenders is that you want to apply for multiple loans and see which company provides you the best financing terms. Pay close attention to the interest rate and length of the loan. These two factors can significantly impact how much you pay over the life of your loan. 

Keep in mind that you should submit all of your applications within a short time frame so your credit only gets one hard hit. 

Finalize The Process

Once you’ve selected the lender of your choice and gotten your final approval, you might have to provide additional documentation such as the bill of sale, registration, title, etc. to your lender. The approved funds will either go to you or directly to the seller in the form of a check or direct deposit. Be sure to ask your lender how funds will be disbursed. 

Once the money has been provided to the private seller, your loan process is complete.   

How Does A Private Seller Car Loan Differ From A Traditional Car Loan?

The process of getting a private car loan is fairly similar to applying for a traditional car loan. But, there are some differences. 

Loan similarities

  • Your loan is secured as the vehicle you purchase is used as collateral. Therefore, if you fail to make payments as agreed, the car you purchase can be repossessed.
  • You can get your loan through a bank, credit union or other lenders.

Loan differences

  • You can’t secure your financing at a dealership since you’re buying from a private seller.
  • You need to provide all the details about the vehicle upfront.
  • You avoid many of the dealership fees you’d otherwise be responsible for paying.
  • You avoid buying your vehicle in a high-pressure dealership atmosphere. 
  • Your purchase doesn’t always come with state protections. Some states do have Lemon Law protection, which requires sellers to repair or refund cars with significant mechanical defects. You have to review your state’s laws to see if there are any protections for you. 

Are You Ready To Get A Car Loan For A Private Seller?

If you find that purchasing a vehicle from a private seller is the best route for you, we believe in helping you get the financing you need. There’s no reason to have to pass up on a car you want because you don’t have the cash on hand to make your purchase. 

At Atlantic Financial Federal Credit Union, we have helped many of our members secure the financing they need to get the car they want from a private seller. We are ready to help you too.

Learn About Securing A Private Seller Loan