When the time comes to find a great used car, you are often better off skipping the dealerships and just looking to friends, relatives or the classifieds to find the best deal. In most cases you will get more car for less money when you buy from a private party. When a dealer gets a car as a trade in they have to put money into it before they can resell it, that’s why you’ll pay more for the same used car from a dealer than you would if you bought it directly from the previous owner. Since even a used car will cost more than most people can pay up front, private party auto loans might be a necessary option.
Of course, you can always try to get a loan from your local bank or credit union but many times these are hard to come by. Especially with the economy the way it is right now. Banks and credit unions are simply very conservative about the types of loans they write and a used car can be a dangerous loan for them to make since the car, which is the collateral, may not actually be worth the amount of the loan.
The car may appear to be in great shape but something could go wrong and it might loss a lot, or all, of it’s value. If that happens the bank is out of luck when it comes to their collateral. It’s usually easier to get a new car loan than a used car loan.
There is another way though, you can try to get a private party loan. In most cases the companies you’ll be working with won’t care too much about your credit history. They tend to be more interested in the vehicle you are trying to buy. Again, the car is the collateral and they want to make sure that they have more than enough collateral to cover the amount of the loan.
In most cases it will be the easiest to go through an online broker who can match you up with the right loan. That way you’ll only have to fill out one application instead of several. A few things that you will need to be aware of are: you need to be at least 18 years old, you have to earn a minimum of $420 dollars weekly (or about $22,000 in a year), you should have been at the same job for at least 6 months and lived in the same location for at least 6 months.
Of course, if you have bankruptcies that aren’t discharged you won’t be able to get a loan. Make sure that when you take on your new loan, you can afford it. Make sure you factor in not only the car payment but the insurance and maintenance costs too.
With the economy the way it is right now there is kind of a weird catch 22 situation happening. On the one hand, many banks have tightened their lending procedures to protect themselves from bad loans, but on the other hand there is an increasing recognition of the fact that many people have suffered and their credit scores have suffered too, so banks are more likely to give credit to people with a few slight dings on their credit report. The bottom line is that there are private party auto loans that you can get as long as you seem like you will be able to repay it.