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Credit Union Private Party Auto Loan

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Private Party Auto Loans For Bad Credit

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Purchasing a used vehicle from an individual instead of a dealership can bring tremendous savings and just as many headaches. Finding financing for such a purchase is tough, and securing private party auto loans for bad credit is even tougher.

While a private party auto sale wont include dealer fees or add-on packages, it does come with several hurdles that often discourage banks from extending loans. Does the current owner still owe money on the vehicle? Is it in good mechanical shape? Is there any warranty backing the vehicle?

Get The Car You Want With The Right Loan

Once your private party auto loan is approved, the lender will either send funds to you or your bank, pay the seller or their bank, or pay the seller’s lienholder . Then it’s up to you to pay off the loan. Making your private party auto loan payments on time can help improve your credit scoreâand that can make it easier to get approved for a loan the next time you buy a car.

How A Private Party Auto Loan Works

Just like traditional auto loans, the vehicle youre financing will secure the private party auto loan. While secured loans tend to have lower interest rates than unsecured loans, the lender can repossess your collateral if you fall behind on payments or default.

Lenders offer terms of 12 to 84 months on private party auto loans. The longer the loan term, the more interest youll pay but the smaller your auto loan monthly payment will be.

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Secured Vs Unsecured Credit Union Car Loan

When searching for a credit union car loan, a product feature to keep an eye on is whether the car loan is secured or unsecured, because this can differ among credit unions. A secured car loan means your car will act as collateral. So if you dont make your repayments, the lender can repossess your car. An unsecured car loan means the loan has no collateral.

Generally, loans with collateral have lower interest rates than loans without collateral, but interest rates also depend on other factors.

How To Apply For A Private

Auto Loans

To formally apply for a private-party loan, youll need to fill out an application with the lender you choose. Youll be asked to provide some information about the car, which may include the vehicle identification number , make and model, model year and mileage. Youll also be asked for personal information, which could include your Social Security number, address, employment and income. The information you need to provide will vary by lender.

The lender will review this information, along with your credit, to determine whether you qualify and what the loan interest rate and terms will be.

Once youve chosen a loan, you may need to provide additional information and documents to your lender, like the vehicle registration, vehicle title, bill of sale and a payoff quote.

Depending on the lender, you may get a check for the agreed-upon sale amount thats made out to the seller or the lienholder , or the loan amount might be deposited into your bank account after the loan closing.

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Determine Your Price Range

Check your credit score and use an auto loan calculator to figure out what you can afford. Vehicle ownership costs include auto insurance, registration and maintenance, so your payment should be financially comfortable for you. Consider getting an auto loan preapproval from a lender of your choice. This way youll definitely know the price range youre approved for and the maximum monthly payment you can expect. Here are the steps to purchase from a private party.

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What Is A Private Party Auto Loan

A private party auto loan allows you to borrow money to buy a vehicle from a private seller, as opposed to a dealership. Here are some reasons you might want one:

  • The car you want is only available through a private party
  • Dealerships dont offer cars in your price range
  • The same car is often less expensive when you buy it from a private party instead of a dealer

Do I Need To Become A Member Before Applying

Save Time And Money With A Car Loan From CoVantage Credit Union

You must be a DCU member to finalize and fund a vehicle loan, but you can submit your loan application before finalizing membership. If you are not yet a DCU member, you will receive information about how to apply to become a member after you receive your loan decision.

For more information about membership eligibility, visit our membership eligibility page.

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Private Party Purchase Paperwork

Do you know what your state requires to transfer the title and registration for a privately purchased vehicle? Get familiar with your states Department of Motor Vehicles or Secretary of State. Most states have handy, online resources, includingprintable forms, such as bill of sale, temporary tags, documentation checklist, etc. Be careful to get the paperwork in order. It might be inconvenient to go back to the seller for signatures or other information after the fact.

Check with your auto insurance provider, as well, to understand your responsibilities for alerting them to your new purchase, so you know that you are covered as soon as you take possession. Lastly, be sure you know how the loan will be paid out . That will save you from having to wonder how you will actually make the exchange of payment for the vehicle.

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What Is A Good Interest Rate For A Car Loan

Interest rates vary depending on your credit score. The best rates are typically reserved for highly qualified applicants applicants with damaged credit receive higher rates. A good interest rate for a car loan, though, is one that allows you to finance a car with manageable monthly payments for your budget.

Here are interest rates you can expect for each credit score tier, according to Experian.

Average loan rate for a new car Average loan rate for a used car
Deep subprime 14.39%

What Are The Advantages Of Getting A Credit Union Car Loan

Members 1st Credit Union

From its minimal eligibility requirements to its membership discounts, here are a few perks of taking out a car loan from a credit union:

  • Competitive rates. You can find car loans or personal loans offering competitive APRs if you have good credit.
  • Lower minimums. You can sometimes find car loans as low as $500 from credit unions, making it a better deal for a cheap private party purchase.
  • Personalized service. Customer service is what most credit unions are known for. Credit unions often have the option to apply online, in person or over the phone. If this is your first time, you could benefit from having someone walk you through the process.
  • Membership discounts. You can sometimes get a higher discount by signing up for autopay from your credit union bank account.
  • Car-buying services. Many credit unions also offer a car-buying service to streamline the application process.

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Do I Need To Have A Vehicle Selected Before I Apply For A Loan

Noyou do not need to have a vehicle selected before submitting your auto loan application. Some members choose to initiate their application before deciding on a vehicle, so that they know their exact budget and can complete the transaction quickly once they find the right one.

When you apply, you have the option to indicate you dont yet know the make and model of the vehicle. However, you will be asked to provide an estimate of your loan amount . If approved, your loan offer will be good for up to the stated amount pending verification of all required documents. When you finalize your loan, you can specify the exact dollar amount you wish to fund.

Is It Better To Get A Credit Union Car Loan

It depends on the person seeking out an auto loan and their needs. Along with banks, credit unions tend to be the more traditional route to secure auto financing. This means youll find much lower interest rates, youll come across lower fees, and you have better odds of getting approved provided you have a solid credit history to back you up.

Like banks, credit unions have a more rigorous process for approving loans and arent as lenient with how much they are willing to loan you. If youre looking to get a credit union car loan, your first checkpoint is to look at their eligibility criteria and apply for membership if required.

Finally, if speed is important to you, you might wish to consider other lenders, because credit unions can take a few weeks to fund your loan.

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Private Seller Pros And Cons

Buying a used car from a private party can have some valuable benefits compared with buying from a dealership. It might be the only way to get the exact car you want, especially if you’re looking for a unique, discontinued or hard-to-find model. Individuals may be less likely to mark up the purchase price than a dealership would often, car owners simply want to get rid of the vehicle. Finally, dealing with an individual can give you more leeway to haggle over the price of the car.

Unlike a dealership, however, a private seller won’t have a finance department on hand to offer you a loan. Since a private seller must get paid in full before you take possession of the car, you’ll need to do some legwork on your own to find financing.

Where To Find Private Party Auto Loans

Auto Loan, Preapproval or Refinance: Getting Started

Not all lenders offer private party auto loans, but most large financial institutions like community banks, local credit unions and online lenders do have them.

Some lenders may require the vehicle to meet certain criteria. For instance, they may require the car to be under 10 years old with fewer than 100,000 miles in order to consider the buyer for a loan. This is common with any used car, whether you purchase it from a dealership or private seller.

Other lenders may have a minimum loan amount. If the vehicle you want is $6,000, but the lender doesnt offer loans that small, you will have to find another lender.

Carefully review the lenders criteria before applying for a private party auto loan to avoid taking a hit to your credit for a loan you dont qualify for.

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Private Party Auto Loans Vs Alternatives

Alternatives to private party auto loans include HELOCs, home equity loans and borrowing from friends/family. But the go-to alternative is a personal loan. In an unsecured personal loan, the lender doesnt take what youre buying into consideration, only your income and credit. This can help you if the private party car loan didnt work out for reasons such as the following:

  • The vehicle has more miles or is older than the lender allows.
  • Youre purchasing a vehicle with a salvage title.
  • You want to borrow less than the lenders required minimum loan amount.

The biggest downside is personal loans usually have higher interest rates because they are not backed by anything other than the borrowers promise to repay. Borrowers with high credit scores may still find competitive rates, though. Here are the current personal loan rates.

Schoolsfirst Federal Credit Union

SchoolsFirst Federal Credit union has partnered with companies like Autoland and Enterprise to bring customers exclusive savings. To become a member, you must be a current or retired school employee or part of their family.

Why it stands out: Along with all the different ways to save, SchoolsFirst also gives borrowers the option of requesting an auto convenience check, which will allow you to write a check for the vehicle at the dealer up to the approved loan amount. It also offers Guaranteed Asset Protection insurance with deductible assistance and options for no payments for 90 days.


  • Offers a school employees auto loan with Summers Off, which allows qualifying members to defer one or two consecutive auto loan payments during the summer
  • Allows you to finance a car from a private seller
  • Make no payments for the first 90 days


  • Summers Off program is only available on auto loans with original terms of 60 months or less
  • Membership is restricted to members of educational communities

What to look for: SchoolsFirst Credit Union offers new and used auto loans from 36 to 84 months. APRs for new cars start at 2.49% and APRs for used cars start at 2.64%. Maximum loan amount is 100% of the MSRP or Kelley Blue Book Suggested Retail Value.

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How Long Does The Application And Funding Process Take

The timeline for application and funding can vary, depending on how quickly the required documentation is provided. In many instances, we are able to provide instant decisions on applications submitted through our online application. You will receive a notification if further review is needed to decision your application. Once you provide all of the documentation needed to finalize your loan, the check is usually delivered by FedEx within 2-3 business days.

Buying A Used Car From A Private Party

Auto Loans

A lot of people like to buy used cars from private sellers instead of going to a dealership. That’s because there are some opportunities to save money and even save time.

We make the process even easier for our members, by offering private party Used Car Loans at the same rate as New Car Loans*, handling DMV transfer for the member, and mailing the sticker and registration number.

For a list of everything you need to complete a private party transfer,

Things to Know About Buying From a Private Party

There can be some risks involved with private party transactions. Here are some things you should know and do before, during, and after buying a used car.

Ask questions

Don’t be nervous about asking the seller questions. You should try to know everything about the car you’re thinking about buying.

Ask them why they’re selling the car, has it been in an accident, how many owners the car has had, who’s been driving the car, and what it was used for.

If the seller doesn’t want to answer the questions, or can’t answer the questions, this is a red flag, and you might want to look somewhere else.

Take the car for a test drive

First, walk around and check the exterior of the car. Look for wear and tear, indications of repairs. Look at the tires. Is the tread uneven? Do they need to be rotated or replaced?

Get a mechanic you trust to inspect the vehicle

Ask the seller to bring the vehicle to a mechanic that you trust. Do not take it to one they recommend or know personally.

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The Private Party Auto Loan

While a private-party auto loan works just like any other auto loan, there are often a couple extra steps you will need to take to be sure you get it all done properly. For example, you should check with InTouch to make sure that you are clear about any age and mileage limits on used car loans that may affect your rate or amount you can finance.

When it comes time to purchase, you will have to provide extra information about the vehicle that would usually be supplied by a dealer. This includes make, model, year, mileage, and the vehicles unique vehicle identification number .As with every used vehicle, it is always a good idea to have the car checked out by a trusted mechanic who can also help you capture this information if you are not sure of where to find it.

At this point you might be thinking that it would be easier to get a personal loan, but there are good reasons to use loans specific to vehicles. The main reason is that personal loans are often unsecured, while an auto loan is secured with the caras collateral, so the rate and terms can be much more favorable.

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