Private Party Auto Financing
A private party car loan is used to buy a vehicle from either an individual seller or from a dealership. This type of loan is sought by a used car buyer independent of the dealership. A private party loan is similar to a traditional auto loan you would get through a dealership but there are some differences.
The Loan Term
Private Lenders typically offer loans between 24 and 48 months. That is much shorter than the typical 72 month dealership auto loan term.
Remember that the longer the loan term the more interest you end up paying over the course of the loan. Therefore, if you can afford to make higher monthly payments on a shorter loan term you will get the best deal.
Higher Interest Rates
Despite typically costing less in interest over the course of the loan, private party lenders tend to offer loans with slightly higher APRs. This is not always the case though, depending on your credit score and how much shopping around you do for loans you can often find a loan with a comparable rate. So be sure to shop around!
Get Approved Before You Buy
In general you go through the loan approval process before you start seriously shopping for a car. Instead of picking out a car and then applying for financing which is the common practice with dealership loans. The result is more flexibility and negotiating power when you are actually shopping.
Another advantage to this setup is that buyers with less than perfect credit can find out exactly how much car they can afford before they decide on one. It sucks to find the perfect vehicle and be told after doing all the paperwork that they cannot actually afford it.
Freedom To Buy From Private Sellers
The difference between buying the same car at a dealership or from a private seller is typically thousands of dollars. Many people think they can't go the private party route because they cannot finance their purchase, but private party auto loans do just that. - 21396
The Loan Term
Private Lenders typically offer loans between 24 and 48 months. That is much shorter than the typical 72 month dealership auto loan term.
Remember that the longer the loan term the more interest you end up paying over the course of the loan. Therefore, if you can afford to make higher monthly payments on a shorter loan term you will get the best deal.
Higher Interest Rates
Despite typically costing less in interest over the course of the loan, private party lenders tend to offer loans with slightly higher APRs. This is not always the case though, depending on your credit score and how much shopping around you do for loans you can often find a loan with a comparable rate. So be sure to shop around!
Get Approved Before You Buy
In general you go through the loan approval process before you start seriously shopping for a car. Instead of picking out a car and then applying for financing which is the common practice with dealership loans. The result is more flexibility and negotiating power when you are actually shopping.
Another advantage to this setup is that buyers with less than perfect credit can find out exactly how much car they can afford before they decide on one. It sucks to find the perfect vehicle and be told after doing all the paperwork that they cannot actually afford it.
Freedom To Buy From Private Sellers
The difference between buying the same car at a dealership or from a private seller is typically thousands of dollars. Many people think they can't go the private party route because they cannot finance their purchase, but private party auto loans do just that. - 21396
About the Author:
Before you purchase your next vehicle, be sure to check out Luke's blog which has more information on applying for a private party auto loan
posted by X - Men @ 4:58 AM
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