Buying a Car From a Private Seller With a Loan

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - October 7, 2020

As a borrower with credit challenges, it may seem like a low-cost car loan for a vehicle from a private seller is the way to go. But getting an auto loan for a private sale car means getting a direct loan, which may take a little work on your end if you're struggling with a low credit score.

Getting a Direct Auto Loan

Getting a vehicle from a private seller means paying cash, or getting an auto loan first via a direct lender such as from a bank, credit union, or online lender. As a borrower with a troubled credit past, it can be a rocky road when it comes to getting a direct loan. In order to get approved, you need to apply and prove that you meet all the lender’s qualifications.

These requirements may include proving your income, residence, and employment, as well as providing car and seller information. You're also likely to need a good credit score. In fact, a good credit score is one of the first things that direct lenders look for. At a bank, you're more likely to need a higher credit score for an approval – not all banks are willing to lend to people with a low credit score.

Credit unions are member-owned, and often have fewer fees to contend with. Since they're not for profit, they're often able to pass their savings along to members in the form of lower interest rates on loans and credit cards. If you're a member in good standing, a credit union may be the way to go for a direct loan with poor credit.

Tips for Buying a Car Privately

Whether you're able to get a direct loan for a private sale vehicle or you're paying with cash, be sure to follow these tips:

  • Check online valuation sites such as Kelley Blue Book or NADAguides to get an estimate of the car's value. Even though this is just an estimate, it's a good idea to know what you're getting into, and to help you avoid buying an overpriced vehicle. It can also alert you to potential issues you might not see if the cost is too low.
  • When meeting a seller, make sure to do so in public, and bring someone else with you. It's best to meet during the day, when you can see and test drive the car in better light. Touch and use everything while you're on the test drive and make sure it all works. You should also take the vehicle to be inspected by a certified mechanic. Remember, cars from private sellers are sold as is, there's no returning it if something breaks down.
  • It's very important to make sure that the vehicle you're buying belongs to the seller, and has a clean title, free of liens. Be sure to get a bill of sale, ask for a vehicle history report, and get any service records the seller has. The paperwork required for a private car sale varies by state, so be sure to know the regulations where you live, or where the seller lives if it's different. You both may be required to go to the DMV or Secretary of State together to finalize the title transfer.

If you're unable to qualify through your financial institution or an online non-bank lender, you're not out of options for getting a vehicle from a private seller. You may be able to sell your current car and take the profit to pay for the vehicle with the private seller.

Can't Get a Direct Auto Loan?

If you're only considering a private sale car because you think it's all you can afford with poor credit, think again. If you can’t qualify for a direct loan, or your current vehicle won’t get you enough cash to get into the car you want to buy, then it may be time to consider special financing.

Even with little to no credit, there are lenders available through special finance dealerships called subprime lenders, and they specialize in working with bad credit borrowers. These lenders look at additional factors beside your credit score to consider you for an auto loan approval.

If you're ready to look for a vehicle to call your own, even if you're struggling with credit issues, we want to help. Here at CarsDirect, we can guide you through every step of the process, from picking out and reviewing cars to matching you with a local dealer that’s signed up with the lenders you need. Get your foot in the door by filling out our fast, free, and no-obligation auto loan request form today!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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