Getting a Car Loan For Private Seller with Bad Credit: Things To Consider
Buying a car from a person instead of a dealership through car financing needs what is called private party car loan. Getting a car loan for private seller is not difficult but you do need to know the process and requirements to make the entire buying experience smooth.
Before getting car loan for private seller, it is absolutely necessary to review your credit report. Get a copy of your annual credit report for free from any of the national credit reporting agencies through us. If you see any blemishes in your report, have them rectified. If there are any outstanding dues, clear them off. Also pay off any debts or outstanding utility bills. Apart from improving your credit score, all these measures will ensure that you have a clean credit report.
Lenders pull out your credit report before evaluating your loan application. If you have a bad credit and are looking for auto loans for private sellers with bad credit, give yourself time of at least six months to repair your credit such that you qualify for loan with better interest rates. The lower your credit score, the higher is the interest rate that you pay for getting a car loan for private seller.
To arrive at the best deal for your financial situation, it is recommended that you shop around for auto loans for private sellers online. Now that you have an improved credit, you can look for auto loans for fair credit online. Remember not all lenders offer such loans, so you will need to research and locate those lenders that do. You can also check with your credit union or the bank where you have home mortgage or hold multiple accounts with. It is likely that you may secure personal loan against your property as collateral. As a last resort you may even consider borrowing from your friends or relatives.
Getting a car loan for private seller implies paying higher interest rates. The rates are usually higher than the standard loans by 2% for new cars and 1% for old cars. This is because the lenders want to minimize their risk and make a profit. Your credit score is a big factor that will determine the interest rate you will be charged. So, repairing your credit report before seeking auto loans for private sellers with bad credit will help. Taxes, registration fee, and title will need to be paid extra.