Buying a car from a private seller can be cheaper, faster and easier than buying from a dealership. But when you skip the dealership, you need a way to finance your purchase on your own. That’s where private party auto loans come in.
With private party auto financing, you won’t have to pay upfront for your new car. Instead, you can pay your lender back over a period of months or years. We reviewed four popular lenders that offer private party auto loans. Read on for information about getting a private party car loan, including tips on how to find the right loan for you and how to buy a car with bad credit.
Our Top Picks for Best Lenders That Offer Private Party Auto Loans
- myAutoloan: Best for Poor Credit Scores
- Lightstream: Best for Excellent Credit Scores
- Digital Federal Credit Union: Best Payoff Period Options
- Bank of America: Best for Higher Loan Amounts
Lenders That Offer Private Party Auto Loans Reviews
The best private party auto loans offer a wide range of loan amounts and flexible payment periods to fit your needs. Whether you’re looking for excellent auto loan rates or a loan for bad credit, the right lender for you is out there. Below are four popular lenders that can help you finance a private party car purchase.
Why we chose it: MyAutoloan is an online lending marketplace that connects borrowers with the right lender for their credit and desired terms. You can get a loan through myAutoloan with a credit score as low as 575.
- No origination fees
- Online application
- Options for borrowers with poor or fair credit
- Not a direct lender
- Mixed reviews for customer service
- Not available in Alaska or Hawai'i
Unlike others on this list, myAutoloan isn’t a direct lender. Instead, myAutoloan is an online service that will negotiate with up to four lenders on your behalf. It has a minimum credit score requirement of 575, which is considered “poor” credit. Because myAutoloan provides offers from multiple lenders, you can access more options and may find better loan terms on this site than with a direct lender.
Here’s how it works: Fill out a loan application at myAutoloan.com and the company will run a soft credit check (soft checks don’t impact your credit score). MyAutoloan will match you with potential lenders, and you'll receive up to four pre-approved offers. If you accept an offer, the lender might run a hard credit check before they officially approve your loan.
Loan amounts and terms vary with each partnered lender. However, according to myAutoloan, amounts can range between $8,000 - $100,000 with an estimated APR of 3.69% - 21%. Payment periods are 24 – 84 months. The site’s customer service receives mixed reviews and isn’t available on weekends, which can make it tough to learn more about your application or approved offers.
The chance to compare multiple offers at once makes myAutoloan a good site for borrowers with poor or fair credit who want to expand their financing options. However, myAutoloan may not be the best choice for you if you’d rather work directly with a lender or if you’re looking for a lower minimum loan amount.
Why we chose it: If you have a good or excellent credit score, you can access a private party auto loan with flexible terms through Lightstream. Lightstream is one of the best online lenders if you want a customized loan for any vehicle type.
- Co-borrowers allowed
- No vehicle restrictions
- No down payment requirements
- No pre-qualification available
- High minimum credit score requirement
Lightstream is a popular online lender that specializes in auto loans and personal loans. It offers a 100% online application process with same-day approval. Lightstream has no vehicle restrictions — you can use this lender to finance any used or new car for a private sale. It also accepts co-borrowers, and there is no minimum down payment requirement.
One downside of Lightstream is that it doesn’t provide pre-qualification approval with a soft credit check. Instead, you can compare rates for different auto loan types by using the “find my rate” tool on their site. Then you’ll have to officially apply for the loan you want, which will incur a hard credit check. That’s another reason this lender is best for people with high credit scores.
Lightstream offers loan amounts of $5,000 - $100,000 with an estimated APR of 6.49 - 14.24%. Payment periods can range between 24 – 84 months. You can customize your payment options and due date, and there are no late fees. Lightstream’s customer service is available over the phone or through live chat on weekdays and Saturdays. The company has positive reviews for its fast application process but receives some customer complaints online for a lack of transparency — because there is no pre-approval offer, loan terms aren’t always clear until you apply and the company runs a hard credit check.
With a minimum credit requirement of 660, Lightstream is best for someone with a high credit score. This might not be the best lender for you if you’re looking for in-person service or if you want a pre-approval offer before officially applying.
Why we chose it: Digital Federal Credit Union (DCU) is an online credit union that offers flexible loans with payment periods as short as 12 months. DCU is a good lender for anyone who wants a low loan amount that can be quickly paid off.
- Payment periods as short as 12 months
- Can offer instant loan approval
- 24/7 customer service call center
- Requires credit union membership
- Initial application asks for social security number
Credit unions offer an affordable alternative to traditional banks and lenders. Digital Federal Credit Union (DCU) is an entirely online credit union that provides auto loans for private party sales. Credit union membership is required to receive a loan, but not to apply — you can join DCU after your loan has been approved. There is no additional fee to join the credit union, and it comes with benefits like discounts on future loans. If you open a DCU checking account and make your monthly payments through direct deposit, you’ll qualify for an additional discount.
When you apply for a loan with DCU, DCU will run a soft credit check, and you’ll get a pre-qualification offer. The pre-qualification process is instant, so you’ll be able to see the terms and estimated APR for your loan before you officially apply. A hard credit check is required to finalize the loan. As long as you meet the qualifications, approval can be instant.
One of the main benefits of DCU compared to other lenders on this list is that it offers loan amounts as low as $2,500 with payment periods as short as 12 months. This is helpful if you need a minimal loan for your car purchase. DCU offers the same rates for new and used vehicles, plus rate reductions for energy efficient vehicles. Estimated APR is around 5.24% - 13.24%, and DCU requires a minimum credit score of 600. DCU offers a 24/7 customer help center to answer questions. However, some customer reviews report slow response times and unhelpful customer service representatives.
Overall, DCU is a good choice if you want a small loan and a quick application process. DCU is not the right choice for you if you aren’t willing to join the credit union.
Why we chose it: Bank of America offers private party auto loans online, in person or over the phone. There is no maximum loan amount and rate discounts are available for Bank of America customers, so this is a good option if you want a loan for a new or expensive vehicle.
- Option to apply online or in-person
- Spanish version of the website available
- No maximum loan amount
- Rate discounts only apply with a high deposit balance
- Minimal information available before approval
Like other traditional banks, Bank of America offers the best interest rates and loan terms to borrowers with excellent credit. However, Bank of America doesn’t publicly disclose its minimum credit score requirements, so people with poor or fair credit can still apply. The online application process is fast, and you can be approved within 60 seconds. Existing Bank of America customers can apply for rate discounts with the Preferred Rewards program as long as they have a deposit balance over $20,000.
With an online application, you can choose between payment periods of 48, 60 or 72 months. You can discuss a customized payment period with a Bank of America representative if you apply in-person or over the phone. APR for private party loans varies by state. In California, for example, Bank of America’s standard APR is around 8.6%. This rate might be lower or much higher depending on your credit score.
Bank of America doesn’t disclose much information about its private party loans before you submit an application. There is also no pre-qualification offer, so you’ll have to incur a hard credit check to see your specific loan terms. To learn more about your potential loan terms before applying, talk to a customer service representative over the phone or in person at a Bank of America branch. They can provide a general estimate without running a credit check so you know what to expect.
Because Bank of America is an established bank with high financial strength, it’s a secure institution to take out a long-term loan with. You’ll get the best rates from Bank of America if you have an excellent credit score and an existing Bank of America checking account. However, this isn’t the best lender for someone with poor credit who wants a short-term loan.
Other lenders that offer private party auto loans we considered
The four lenders we reviewed above offer private party auto loans for various rates and payment periods, but they aren’t your only options. There are plenty of other lenders that offer loans for private party auto purchases.
Below are two more popular lenders for private auto loans. These are secure, legitimate lenders that come with their own benefits but fall short of the top four on our list.
- Loan amounts as low as $500
- Uses a soft credit check for pre-approval
- Requires credit union membership
- Discounts only apply with PenFed car buying service
PenFed Credit Union could be a good option if you're looking for a very low loan amount. PenFed doesn’t disclose its minimum credit score requirements. However, credit union membership is required, and there are no applicable discounts unless you use PenFed’s online car buying service.
- Options for borrowers with poor or fair credit
- Online application
- Income requirements for some loans
- High interest rates may apply
Auto Credit Express is an online lender that specializes in auto loans for people with poor credit. You can apply for a loan with Auto Credit Express regardless of your credit history, past bankruptcies or other issues. But Auto Credit Express loans come with strict income requirements of at least $1,500 per month, and interest rates can range up to 30%.
Private Party Auto Loan Guide
If you want to buy a car through a private sale but don’t want to pay upfront in cash, you need a private party auto loan. Verified financial institutions like online banks, traditional banks and credit unions offer private party auto loans. A private auto loan can provide as much as $500,000 in funding for your private car purchase. You'll pay it back over a specified number of months or years.
Like with any loan, you should do your research before you take out a private party auto loan. Some lenders have high interest rates, especially for borrowers with poor credit — that can lead to debt if you don’t pay back your loan in time. Take your time, shop around and compare offers before you decide on any private party car purchase agreement.
This guide will walk you through the ins and outs of private party auto loans.
What are private party auto loans?
Private party auto loans provide funding for a private car purchase, or any car sale that isn’t facilitated by a third party like a dealership. Financial institutions offer private auto loans, which will accrue interest over time. You can use a private party loan to fund your purchase of any vehicle, new or used.
Not all lenders offer private party auto loans. Borrowers with excellent credit can get a private party loan with a more competitive rate than a dealership might offer for financing a car purchase.
How do private party auto loans work?
To understand private party auto loans, you need to know how auto loans work. Private party auto loans are similar to traditional auto loans but have a few key differences.
When you buy a car at a dealership, the dealership’s loan office will connect you to a partnered third-party lender and handle most of the paperwork on your behalf. But when you buy from an individual seller, you’ll work with a lender directly. Your lender will pay the seller (or whoever holds the vehicle title). Then you’ll pay back the lender for the full value of your car, plus interest, within your loan term.
Here's a basic overview of what to expect when financing a private party used car:
- Know which car you’re buying: You should have your car picked out and contact the seller before you apply for a loan. The lender will want details about the car, including its age, vehicle identification number, make, model and mileage.
- Find your lender: Compare lenders to find one that works for your situation. If you apply for pre-approval, make sure the company uses a soft credit check that won't affect your credit score.
- Apply for your loan: Fill out your application online or in-person to receive a loan for the full price of your car.
- Transfer ownership: In a private sale, it’s up to you to contact the DMV and transfer the vehicle title to your name.
- Pay off your loan: Make monthly payments to your lender until you pay off your loan completely. The faster you can pay off your loan, the less interest you’ll have to pay.
How to get approved for a private party car loan
Applying for a car loan for private party sales is similar to applying for a personal loan. Once you pick the right lender, the process is pretty fast — you might even get approved within one day of applying. Here are the basic steps you can follow to get the best possible loan terms.
Look for lenders that offer pre-approval
When comparing your options, look for lenders that offer private party auto loan pre-approval. Pre-approval, or pre-qualification, is an unofficial loan offer that shows the terms you qualify for. This process uses a soft check to look into your credit.
Pre-approval offers allow you to compare terms from multiple lenders without damaging your credit score. Once you decide to officially apply for a loan, your lender might run a hard credit check. Hard checks can impact your credit score, so it’s best to do this just once.
Improve your credit score as much as possible
Some lenders offer private party auto loans for borrowers with bad credit. However, like with traditional auto loans, borrowers with bad credit generally receive higher interest rates. To get the best rates and repayment terms, improve your credit score as much as possible before applying for a loan.
If there’s nothing you can do about your credit score in the short term, it’s best to pay off your loan as quickly as possible. Paying off your auto loan will also help improve your credit.
Prepare your documentation
To apply for a private party auto loan, you’ll need to provide information about yourself and the car you’re buying. Some documents you might need include:
- Your driver’s license
- Your social security number
- The vehicle title
- The vehicle registration
- A written pay-off quote from the seller’s lender, if the seller hasn't already paid off the car
Submit an application
Once you have the correct documents, submit applications to lenders that offer pre-approval. Make sure the lenders use a soft credit check.
If you want to apply with a lender that doesn’t offer pre-approval, get as much information from the company as possible before you apply. Research their website thoroughly, and contact a customer service representative to ask for a loan estimate.
Compare your loan offers
Compare loan offers and choose the best lender for your needs. Be aware that pre-approval offers aren’t set in stone — your final offer may look different than what was stated in the pre-approval.
If you don’t agree with the loan terms in your final offer, you can still change your mind. It’s better to back out of an offer you don’t like (even if it could have a small impact on your credit score) than to agree to a less-than-ideal loan.
Lenders That Offer Private Party Auto Loans FAQ
Do private party auto loans build credit?
Paying off any loan on time can improve your credit score. Private party auto loans are no exception. Although your credit might take a temporary hit when you take out the loan (new credit can damage your credit score, as can a hard credit check), it will improve in the long run as you make your loan payments.
Is it hard to get a private loan?
Private party auto loans aren't as common as traditional auto loans, but that doesn't mean they're harder to get. Just be prepared to negotiate with your lender directly. You might also pay slightly higher interest on a private party loan than you would on a traditional loan.
How We Chose the Best Lenders That Offer Private Party Auto Loans
To choose the best lenders for private party auto loans, we compared some of the most popular lenders on the market. Important qualities of the best lenders that offer private party auto loans include:
- Pre-approval: Pre-approval offers make it easier to compare rates from different lenders without hurting your credit. Not all lenders in this review offer pre-approval, but those that do use soft credit checks to provide an estimate of your loan terms.
- Third-party reviews and certifications: The best private party auto loans are offered by financially strong, well-reviewed institutions such as established banks, online lenders and credit unions.
- Access to customer service: Applying for a private party auto loan can be confusing. Helpful, responsive customer service is an asset when you have questions about your application.
- Positive customer reviews: We looked for lenders that have positive online customer reviews.
- Wide range of loan amounts: The best lenders offer a range of loan amounts to help you afford your new or used car.
- Wide range of payment periods: Flexible payment periods make it easier to get your loan paid off quickly. We looked for lenders that offer payment periods as short as twelve months.
- Reasonable credit score requirements: You’ll get the best rates on your auto loan if you have a good or an excellent credit score. However, we looked for lenders who accept borrowers with scores of 600 or less.