If you have been thinking about purchasing a car from a friend, neighbor, or any other private party you will need to look into private party auto loans. There are many different sources that you can use to find a private auto loan, but no matter where you go, the process is going to be about the same. The biggest difference between the various sources is what kind of documentation is required, some will require more documentation than others will but that doesn’t mean that one source is better than the other is.
Private party auto loans, also called a person to person auto loan, have some of the same features that dealership car loans have, but are also quite different. One of the biggest differences between the two is the interest rate; dealership car loans often have lower interest rates than private party loans, by as much as two percent. Another difference is that the fees that you must pay when purchasing a car, which includes titles, taxes, and registration, can be combined into the loan from a dealership, but must be paid out of pocket with a private auto loan.
One of the similarities with car loans for dealerships and private auto loans is you might be able to obtain a loan in spite of having bad credit, but they are harder to get. However, many people believe that obtaining a private loan with bad credit is easier than being financed when purchasing a car through a dealership. However, there are some issues you need to be aware of when applying for a private car loan with bad credit. Knowing about these issues ahead of time helps ensure that you can take care of them properly to help increase your chances of qualifying for the loan.
The first issue you need to address is finding lenders that give out private loans to people with bad credit. You will want to do plenty of research before applying through any company because you don’t want to hurt your credit score any more than it already is. Even if a down payment is not required, if you have bad credit coming up with a good-sized down payment can help improve your chances of getting the loan. One reason for this is that a down payment lowers the total amount you need to borrow, which will help reduce your monthly payment amount. The lower your monthly payment is the more likely you are to qualify for the loan.