There aren't many ways to finance a car from a private seller, but one of the best options available is a private-party auto loan. Why is it the best? Unlike other financing options, a private-party auto loan is specifically designed for purchasing vehicles from individual sellers. While it might seem complex or hard to find, a private-party auto loan is often the most suitable choice. Aside from their scarcity, the main drawback is the slightly higher interest rates compared to traditional auto loans, such as dealership loans, which are the most common type. However, you can't use a dealer auto loan for a private-party car purchase, which means you'd have to buy from a dealership, an option with its own set of disadvantages. We'll tackle the dealership loan limitations in more detail another time. For now, let's focus on private-party auto loans.
To buy a car from a private seller using a loan, you secure private-party financing from a bank, credit union, or another lender. The lender issues the loan amount, which you then use to pay the seller, and you repay the lender over time with interest. The car then remains in the lender's custody as collateral until the loan is paid off. So, essentially, a private-party auto loan functions similarly to traditional auto loans. However, most lenders will consider the car you're buying before approval, and some may require you to have a specific car in mind when applying. The application process usually starts with an application, but you might get pre-approved before final approval. Preapproval gives you an idea of the amount you'll be approved for and the loan terms based on the car and your financial standing.
Yes, TwinStar Credit Union offers private-party auto loans and refinancing and cash-out refinancing. One of the main advantages of using a TwinStar Credit Union private-party auto loan is their low flexible rates, which can save you money over the repayment period. They also allow a 90-day payment-free period after you take the loan and quick -preapproval. So, if you're considering buying a car from Exotic Car Trader's private sellers, you can use a private-party auto loan from TwinStar.
When a private-party auto loan is not available, there are a few other financing options that you can consider when buying a vehicle from a private seller. Personal loans are commonly used alternatives, though they come with higher interest rates than private-party auto loans because they are unsecured. For those seeking lower interest rates, options like home equity loans or lines of credit can be considered. These loans offer lower interest rates because they are secured by your home. However, it's important to note that they also carry the risk of foreclosure if you cannot make payments. Alternatively, if the vehicle you're purchasing is inexpensive or you only need a small amount of additional funds, using a credit card with a sufficient credit limit is also an option.
A private-party auto loan provides a personalized financing option when buying a car from a private (owner) seller. The only downside is that it has slightly higher interest rates compared to standard auto loans. But regardless of whether you choose a private-party auto loan or explore other financing options, the goal is the same: to buy a car from a private seller rather than a dealership.
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