Many consumers do not really have the immediate cash to purchase their auto needs. They turn to banks and loan companies for car financing. When you are purchasing from a private car sales, there are a few lenders who are willing to extend financing after a thorough check and investigation. However, there is a small chance of obtaining bad credit car loans for a car purchase from private sellers.
Car Financing From a Private Seller
Private car sales (Private sellers) are the biggest market for car sales. However, many lenders do not freely provide financing if you are purchasing from a private seller because lenders view this as high risk, considering that fraud is higher unlike when dealing directly with a licensed car dealership. The possibilities of buying a defective or a misleading vehicle also increase with a non-licensed private seller.
The most practical method of financing a purchase from private sellers is through your local credit union or your local bank. You can also seek the services of a finance broker who has access to several specialized lenders. They can find you a lender who can provide the funding you need. A second-hand vehicle sale also requires a vehicle dealer license. Not having one is punishable by law and will require fines and imprisonment. You can check for second-hand vehicle dealer license here.
After searching for a lender who can provide private sale car financing, borrowers may submit an application directly. If approval had been granted, the lender can transact directly with the private seller. You may also get a check from the loan provider to present to the private seller. Upon providing the check, the title of ownership will be transferred to you with the lender as the securing party.
Bad Credit Car Loans for Private Party Car Sale
Getting financing for a car purchased from a private seller is already challenging and it becomes more challenging for those who have a bad credit. Lenders will have to make a thorough investigation before they even decide to provide an auto loan for a private seller.
Usually, borrowers with bad credit get the services of a subprime lender who are eager to work with borrowers with bad credit. However, these lenders work with indirect lenders or agents along with licensed dealerships.
They typically want to look at two critical elements – verification of borrower information and vehicle information. Thus, subprime lenders can finance those with bad credit to purchase a car through a dealership. But sadly, they don’t finance purchases through private sellers.
Bad credit car loans are second chance loans provided to borrowers. However, there is a slim chance that lenders can provide this type of loan to buy a car privately. Nonetheless, finance brokers may be able to extend your help. Talk to a car loan broker to see what options you have.