How Private Party Auto Financing Works

It's a person to person car loan when you purchase your vehicle from a private party and not a dealer. This sort of financing has some of the same features as loans from a dealership purchase. However, there are of course some key differences.

Private Party Financing loan terms tend to be less than purchasing a new car from a dealer. A new car loan is typically offered for as long as seventy two months. On the other side, the maximum available loan term for private party car financing is usually forty eight months.

Please take note that the longer you spend financing your car, the more money you are going to end up paying in interest over the course of the loan. So be sure to try and finance your loan for as short of a time period as possible.

Rate of Interest

The interest rates that are associated with a person to person auto loans are generally higher than new or used cars that you would purchase from a dealer. It's pretty common for the interest rates to be as much as two percent higher than a new car dealership purchase and one percent for used vehicles. What rates of interest you receive will depend upon your credit profile and history.

It is always recommended that you receive a copy of your credit profile before applying for any type of car financing. You need to be sure that all of your information will be one hundred percent accurate and up to date.

The Down Payment

Most Private Party financing providers will not require you to have any sort of down payment when you apply for a loan for either a dealer or a private party purchase. However, a great rule of thumb is to try and put down not a bit less than twenty percent to avoid becoming upside down on your car loan. This means you wind up owing more than what the car is worth.

The Taxes, Title and Registration

The fees that are typically associated with taxes, title, and registration can be usually combined into a the final auto loan amount when you purchase form a dealer. However, these fees can not be combined into your private party car finance loan. You will have to pay for these fees out of your pocket.

The Name on the Title

When you purchase a car from a dealer, the name it put on the title the moment you sign the papers and make the deal official. Although, when purchasing a car from a private seller, it can sometimes take up to two weeks for your name to be placed on the title for your new or used car. This happens usually because it often takes the seller's lender a bit of time before they fully complete the pay off process.