Buying a car from a private individual can get you a good deal, but it can be difficult to get approval for vehicle financing if your credit rating is poor. Here is information on direct car loans for private cars.
Car loans for individuals
To get a car loan to pay for a private seller’s car, you will need a direct car loan. These are slightly different from the third party loans that you get through lenders signed up with dealerships, such as subprime lenders and automaker captive lenders. They usually only deal with vehicle financing for vehicles at the dealer’s site.
Direct lenders include credit unions, banks, and online lenders. Although there are many such lending institutions, they cannot always help borrowers with bad credit history.
Many direct auto lenders require a credit rating above 660.… Borrowers with tarnished credit may even have some trouble financing a private seller’s car if their credit rating meets the threshold. It all depends on the auto lender you work with.
However, if you have experience with a particular financial institution, it can increase your chances of getting approved. For example, credit unions can work with you in some cases, because they belong to the members. If you are a longtime member of your credit union and your accounts have historically been in good shape, then they may want to work with you despite a less than ideal credit rating. But again, this is not a guarantee.
Private seller vehicles can be risky
Aside from the potential struggle to get a car loan permit when you have a bad credit history, cars for individuals come with slightly more risk than a car from a car dealership.
Typically, vehicles from a dealer parking lot have been inspected, prepared for sale, have clear names, and may even come with a vehicle history report and service records. Dealerships prefer to sell cars in good condition, and since they are a little more careful with their lot selection, this can provide more confidence to the lender that the vehicle is a good investment.
On the other hand, private sellers can alert the direct lender. You may need to schedule a third-party inspection of a private seller’s car before you can get a loan permit. A car at risk of mechanical breakdown is not a good investment for you or the lender.
Moreover, direct lenders have age and mileage requirements which must be met in order to qualify for funding. If the private party car you want to buy is older (10 years or older), it can be difficult to get approval.
Dealership may be the best choice for borrowers with bad credit history
If your heart is set for a private car dealer but your credit is wearing out even worse, you may face several hurdles in getting financing. Not only are direct lenders hesitant to approve a loan to a borrower with credit problems, but a private car comes with its own set of problems as it may not be in as good a condition as choosing a franchised dealer.
While it is possible to get a good deal on a private seller’s car as it does not have the overhead costs of a dealership, risk of buying lemon here. This risk exists with dealerships as well, but remember that they are often checked before selling.
When your credit rating is not the highest, it may be worth taking the time to consider subprime financing. Subprime lenders are auto lenders with a bad credit history registered with special financial dealerships. They often help borrowers in unique circumstances such as bankruptcy, no credit, new buyers, and more. Turning to direct auto lenders who cannot help bad credit borrowers can lead to wasted time, energy, and mental fatigue. Skip it all and work with us in Car loan Express!
If you need a car now, fill out our free car loan application form Today. We will do the job of finding a special financial representative in your area, free of charge and without any obligation.