Private Party Auto Loans with Bad Credit

Get Car Financing
Even with poor credit.

By

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.


, - February 3, 2020

Private party auto loans are just one option for people with poor credit that need a car loan. These are a type of direct loan, and they differ from subprime loans that bad credit borrowers often get through special finance dealerships.

Where to Find Private Party Auto Loans

Private party loans often come from a bank, credit union, or online lender, and are used for buying a vehicle from a private seller rather than a car lot. When you get a direct loan, you're pre-approved for a set amount, which gives you the freedom to choose any vehicle that falls within your price range, whether it's from a private seller or a dealership.

There can be advantages to buying a car from an individual, but it can be a lot of work to get a private party loan, especially if your credit is less than perfect. Often, direct lenders are able to offer loans at lower rates than lenders that work through dealers. One of the first places to look for a direct loan should be a bank or credit union that you have a relationship with. It could go a long way toward helping you be considered for loan approval if you already have an account in good standing at one of these financial institutions.

Not all direct lenders work with bad credit borrowers, however, so it's important that you don't apply just anywhere. When you're applying with online lenders or banks, you should check to see if they work with poor credit borrowers. Additionally, if you spread your search out over too long a time frame, you could risk dropping your credit score further.

Disadvantages of Private Party Car Loans

A private party auto loan may sound like a great idea when you find a vehicle you want to buy from an individual. However, these loans still require documentation about your financial situation in order to get approved. There's also a greater emphasis put on your credit score through a direct lender.

Lenders that offer these types of car loans typically offer them to borrowers with the best credit. If your credit is less than perfect, if you’re approved at all, you're likely to only qualify for higher interest rates and shorter loan terms.

The Alternative to Private Party Auto Loans

Unless you're 100% set on getting a specific vehicle from a private seller, getting a bad credit auto loan through a subprime lender at a special finance dealership may be a better option. These lenders look at more than just your credit score to determine loan approval, and you may be surprised at the options available to you through them.

If you decide to go this route instead, you need to be prepared to provide a number of documents to the lender, which you do through the dealer’s special finance manager, so be prepared when you visit the dealership. You're going to need to provide proof of income, employment, residence, identity, and a working telephone, as well as a down payment and personal references. Most lenders have the same basic requirements, but the specifics can vary.

When subprime lenders use these additional factors to look into your situation, it gives you a better opportunity for approval consideration. You have to make sure you're working with the right lender, though. Not all lenders work with bad credit borrowers, and knowing just which dealer to go through can be a challenge. However, handling this challenge is one of our specialties.

Finding a Dealership through CarsDirect

At CarsDirect, we work with a nationwide network of special finance dealerships, and we want to help you find one in your area. By filling out our simple auto loan request form, you can skip the hassle of driving around town applying with dealer after dealer just to be turned down by the wrong lender.

But that's not all we can do. With CarsDirect, you can research new and used cars, find the vehicle you need before you set foot in a dealership, and even use our car loan calculator to help get your budget under control before you shop. Don't hesitate to let us be your go to source for all your car buying needs. Get started right now to see what we can do for you!

Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.

Get Your Free Score

Auto Insurance

Get competitive quotes on insurance in your area.

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.

Get a Free Quote

Need a Car Loan?

It only takes a minute.

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.


Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer|
COPYRIGHT 1999-2020 MH Sub I, LLC dba CarsDirect.com