It is common practice among Americans to buy a used car from a private seller. People often prefer buying from a friend or relative because they trust them instead of a dealer. But sometimes, you may not have enough cash to pay the seller. And, you may need a private party auto lender to help you out.
Do not confuse Private Party Auto Lenders with Private Lenders
When a dealer is involved in an automobile sale, the traditional lender gets the assurance of compliance with the prevailing industry standards. Additionally, as dealers have experience selling used cars, they can quickly provide the needed documents to the lender and thus, expedite the process.
When buying a used car from a private seller, your loan options change. Often, people confuse private lenders and private party auto lenders. For example, a private lender can be anyone from a friend or family member willing to help you in times of need. The interest rate will depend on mutual understanding and negotiation. And the lender will not report your monthly payments to the credit bureaus.
On the other hand, a private party auto lender is someone who approves a loan application for a private party auto sale. A private party auto lender does not require the presence of a dealer for approval.
One must understand that a private party auto lender is assuming additional risk because they do not have any prior information about the seller. And, so, they may ask you detailed questions regarding the chosen vehicle.
Does it make sense to Apply with a Private Party Auto Lender?
1. Private Lender is not Always a Good Idea
Private lenders form the unorganized financial lending market. It means the government or other financial organizations do not regulate them. Although, they can have collateral on your car. So, if you cannot make payments, they can repossess your vehicle.
Private lenders can ask for higher interest rates than average auto loans available on the market. Additionally, you may have a shorter loan term, which means you will have to repay the loan faster. It can put an unnecessary burden on you.
2. Personal Loans can get Expensive
People tend to avoid an auto loan when buying a car from a private seller. Instead, they seek a personal loan without any collateral. You can use funding from a personal loan for any purpose you want. When you do not put any property up for collateral, you do not have the risk of losing your car. However, as the lender assumes the additional risk, they may charge a higher interest rate.
3. Online Private Party Auto Loans are Easy
Going online is the most convenient way to get an auto loan for a vehicle. With online private party auto loans, you do not have to worry about the lack of dealer involvement. In addition, private party lenders have experience approving loan applications to complete a private party sale. The entire process is online which give you more freedom.
Before applying for a private party auto loan, check whether you are eligible for the funding. Often, lenders put a cap on the age of the vehicle and the numbers on the odometer. Also, learn about the average APR (Annual Percentage Rate) to determine how much it will cost you.
Buy a Car today!
It is better to apply for a private party auto loan if you are not eligible to get a loan from traditional institutions. The interest rates will be lower than personal loans as the loan will have collateral in the form of your vehicle. It will give you peace of mind and safeguard other assets. A private party auto loan is also better than private loans because it provides more transparency than private lending and gives you a chance to improve your credit score.
Apply for private party auto loans with RapidCarLoans.net. Seek the best interest rates and enjoy guaranteed car financing at the click of mouse. |
