Hunting for a car on online listing platforms such as Exotic Car Trader, Facebook Marketplace, Craigslist, and others can be a rewarding experience, especially if you're looking for a used car. Dealerships usually have higher standards for used cars, so these are either highly-priced or might lack something you want, for example, several tasteful modes. One of the major downsides of buying a car from a private seller is financing the purchase, but that's where private-party auto loans come into play. What is a private-party auto loan? Simply put, it's a type of financing tailored to finance a car sold by a private seller. Since the vehicle is used as collateral for the loan, ownership doesn't transfer to you until the loan is fully paid off. Additionally, there are typically no guarantees or warranties on the car. And because it serves as security for the loan, many banks don't offer private-party auto loans due to the risk involved. So, does Ally Bank offer private-party auto loans?
Ally Bank, like most banks, does not offer private-party auto loans. Instead, they only provide dealer financing and auto refinancing. Their dealer financing works through the bank's accredited dealerships, so you'll have to locate and physically visit a dealership in your area that offers Ally Bank dealer financing to determine if you qualify for a loan. This is unlike their auto refinancing, which you can prequalify for online.
As previously mentioned, a private-party auto loan is a type of financing designed to help you buy a car from a private seller. A private seller might list a car individually through platforms like Exotic Car Trader or through consignment to reach a broader audience. When it comes to banks offering private-party auto loans, the approval process is similar to that of other auto loans. Once approved, the funds are typically disbursed to the seller, who will then transfer the title to the lender. However, approval for private-party auto loans involves more stringent criteria regarding the car itself due to the higher risk posed to the lender. This differs from dealer auto loans, which often have less strict criteria because dealerships usually provide warranties and guarantees. Additionally, lenders have established relationships with dealerships. For example, Ally Bank dealership auto loans are available in over 25,000 dealerships.
Private-party auto loans, despite their complexity, offer several significant advantages. Some of the major benefits include:
By allowing you to finance purchases from private sellers who often offer cheaper cars, private-party auto loans can save you a decent amount of money on your car purchase by avoiding dealership fees and markups.
Personal loans are a common alternative for banks and credit unions that don't offer private-party auto loans. However, since personal loans are typically unsecured, they have higher interest rates, making them more expensive than private-party auto loans in the long run.
Although Ally Bank doesn't provide private-party auto loans, there are other lenders that do, such as PNC Bank and First Credit Union. The best way to prepare for a private-party auto loan is to explore various lenders and thoroughly research your car options. This includes assessing the potential for stricter loan requirements associated with each car.
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