Private party auto loan – What is it and how does it work?



When it comes to purchasing a new vehicle, there are several directions you can go.

You could buy directly from a dealer, get one from an auction house, maybe a company-owned fleet car or you could purchase from a private seller. If you go the private-seller route, you might need what’s known as a private party auto loan. And if so, here’s what you need to know. Let’s start with private party auto loan: what is it?

What is a private party loan?

In simple terms, a private party auto loan or a person-to-person loan is a loan through a financial institution that allows the borrower to purchase a vehicle from an individual seller.

How does it work?

Now that you know what a private party auto loan is, let’s get into how it actually works through online lender RoadLoans.

First, you can apply for a loan to purchase from an individual by simply filling out the application here. You will go to the “Loan Selection” option and select “Purchase From Individual.” If approved, you can begin looking for a vehicle being sold by a private party.

There are a few things to keep in mind if you get approved for financing through RoadLoans and want to work with a private seller:

  • It typically takes around 15 days to complete the entire loan process.
  • If you are able to locate a vehicle through an individual seller, you can possibly negotiate a good price.
  • RoadLoans works with a third party to assist with the paperwork for lien perfection.
  • The buyer must locate a seller who is willing to work through the RoadLoans process.
  • RoadLoans requires a vehicle inspection (not a mechanical inspection) to ensure the vehicle is approved for sale and meets our requirements.
  • RoadLoans allows for the vehicle to be 12 years old or newer and have up to 100,000 miles.
  • If the buyer and seller work together and provide the required documents on a timely basis, the private party auto loan process can be seamless.

The process of buying a car from a private seller is of course different from buying at a dealership, and there are pros and cons to each option.

For example, buying from a private seller doesn’t offer the convenience of shopping for vehicles under one roof, and privately sold vehicles are generally purchased on an “as is” basis.

On the other hand, private-sale prices are typically lower than those offered by dealers, who act as middlemen, and potential savings might add up to thousands of dollars.

Take a Toyota Camry, America’s most popular car. Kelley Blue Book says the fair purchase price of a base 2014 model, in good condition with typical mileage, is $14,572 at a dealership. Compare that to a private-party value of $12,186 – a potential saving of $2,386.

In the end, it is your decision if you decide to purchase a vehicle from a private seller. Since every person’s financial situation is different, do your research and look into what works best for you!

Apply for a private party loan with RoadLoans.


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