What is a Private Party Used Car Loan?

What is a Private Party Used Car Loan?

What is a Private Party Used Car Loan?

A private party used car loan is the type of finance you will need if you are purchasing a second hand vehicle through a private sale as opposed to a used car dealer. There are several things that you will need to be aware of when getting finance for a car that you are buying privately. For this reason it is a good idea to go with a finance company who offers these specific loan products as they will have the experience to assist you with your finance and help you choose the right loan options.

There are a large number of different companies, including your large banks and financial institutions and many smaller non-bank lenders, who will be able to provide you with a private party used car loan. Gaining a good understanding of how a private party used car loan works will assist you in choosing one that is right for you.

One thing that you will need to know about a private party used car loan is that generally you will not be able to borrow 100% of your purchase price. This is because, as with all second hand auto finance, lenders will apply a used car loan value to your finance which generally requires a 20% down payment. Due to the fact that cars depreciate in value so quickly, lenders will rarely finance the total purchase price through a private party used car loan as they want to ensure that your finance package is not greater than the value of the car you are buying.

While there are some lenders who will give 100% finance on a private party used car loan, you do need to be aware that these lenders may charge more for their loans. This is because there is a risk that they will not be able to recover the value of your loan if you default. If you do not have the money to make the required down payment on your private party used car loan then a lender who can finance the entire loan amount can often be your only option. But, before you rush in a purchase your vehicle you should ensure that the amount you are paying is in line with the market value for that particular make and model.

Another thing that you will need to know before buying a vehicle privately is that there will be costs involved in the transfer of ownership. In most cases the amount you will be required to pay is based on the purchase price of the vehicle and can sometimes be quite expensive. You should look into how much the transfer fee will be before you take out your private party used car loan as sometimes you may be better off using your savings to cover this fee and borrowing the entire purchase, even if it does involve a slightly higher interest rate.

As with any other type of auto finance, shopping around for a private party used car loan is important. There are many lenders who can provide you with quotes online and in most cases you can also apply for your finance over the internet, making the process of obtaining your loan a lot faster and more convenient.

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