Private Party Auto Loan Information

Recently getting a private party auto loan has become much more common. The current economic situation may have been devastating for some, but it has created new opportunities for others. Since the automobile industry has been affected so extensively, and since so much of the success of the U.S. economy is tied to the automobile industry, it was only a matter of time before creative thinkers came up ways to keep wheels rolling and found ways to make private seller car loans.

In the past, lenders were only willing to make car loans for the purchase of new cars. Private seller car loans were not even considered. A new car, purchased from a new-car dealer, provided a layer of security for a lender that could not be obtained otherwise. Lenders could rely on the dealer invoice, the manufacturer’s suggested retail price, the manufacturer’s warranty and most importantly, the commercial context in which the transaction took place, to be assured that the collateral was worth the amount being financed. Eventually, even certified used cars, sold from a new-car dealer’s lot, or vehicles coming off an auto manufacturer’s leasing program, gained that same level of confidence. While loans for previously owned vehicles were made a higher interest rates, at the least the financing was offered.

Keep in mind that the two major elements that go into the financing of an automobile are the credit-worthiness of the borrower and the value of the collateral. Unlike a home loan, where the collateral (the home) traditionally appreciates in value, a car is a depreciating asset. Lenders are not in the used car business, nor do they care to be. The theory of lending for the purchase of a new car, covered by a manufacturer’s warranty and collision insurance, was that if anything happened to the collateral, it could be repaired or replaced, with the borrower being responsible for only deductibles. As a car grew older and its book value decreased, the possibility that a borrower would simply walk away from an expensive repair or a non-compensated accident increased dramatically. A borrower in that situation was more apt to default on the car loan and leave the lender with the worthless collateral and a personal obligation that would be difficult to collect.

By adding private seller car loans to a lender’s portfolio, more loans, on otherwise trustworthy vehicles, will be created. With unemployment rates high, and many of the unemployed responsible for large car payments, a private seller used car loan would appear to be a win-win situation. In this transaction, a potential purchaser could easily provide a lender with all of the original documentation for a vehicle, a printout of the vehicle’s accident and repair report, and have the vehicle brought to an independent appraiser to substantiate its value. Add to that a certification from the original manufacturer that the warranty is in full force, and the lender is assured that the private seller car loan is fully collateralized. With a creditworthy purchaser, the lender will be in the same position it would have been with a new car loan. In fact, considering the financial condition of the automobile manufacturers, lenders might even be in a better position.

So think about a private party auto loan if you are looking at getting a car.

Military Auto Loans: Advice For Soldiers Looking To Buy A Car

Many car dealerships, especially those located near a military base, will give a substantial discount to military personnel. This may not be standard policy, but should always inquire if such a reduction in the purchase price of a vehicle is available. If you already have financing for your car loan in place from a lender, or secure one through the dealership, you may be able to save $500-$1,000 by taking this step. Also, the dealership might want to see proof of your military service, so be prepared to provide the agency with a copy of your military ID card when you set out to buy a car.

Deciding what to car to buy and where to buy

If you want to feel more confident when buying a new care, note that a family financial counselor may be available, free of charge, at your military installation’s Family Support Center. After reviewing your financial situation, a counselor can help you determine if buying a new car (and the monthly military auto loan payment that will go with it) fits your budget. You may also discuss the establishment of a car maintenance fund, the related car insurance, and some ways of reducing your other current expenses to ensure that you stay on course financially. It is crucial that you know exactly how much you can afford before you sign any paperwork.

Since those in the military are often transferred and move frequently, most installations have a reserved space (jokingly referred to as a “lemon lot”) where military personnel display the cars they want to sell, often because of impending deployment. If you are interested in buying a used car and are unable to find anything suitable, check out the BX/PX/NEX, where you may find advertisements for used car on the community bulletin board, and refer to your base’s official newspaper as well. When you find a used car that you like, remember to have a mechanic check it out before you seal the deal.

Make the most of your military status with military auto loans

Some auto insurance companies cater only to those in the military, and you may get a very good rate from one of them because of your active-duty status, and others may also give you a discount. Start looking for insurance coverage before you buy a car, and as you investigate the rates being offered, mention that you are an active duty and would like to know what discounts are available to you. When you feel that you have found a good deal, go to the dealership, complete the sale and have your insurer fax a copy of your “proof of insurance’ to them. Then both your loan and your auto insurance will be in place

As a member of the military you are in a unique position when it comes to paying off any type of loan. Shirking your responsibilities is frowned on in the military, and your creditors know that if you fail to meet any of your obligations, they can contact your supervisor and inform him or her that you are behind in your payments.

Going overseas is a special case

If you find that you are being transferred out of the country, you might one want to sell both of your family cars and buy a new one. Be sure to tell the lender that your new car will be going overseas because the regulations covering certain lenders do not allow a vehicle to be shipped out of the country if the auto loan is not paid off.

A word about to the wise about auto loans

If a loan company offers you as extremely high interest rate, and “extras” like life insurance and disability insurance coverage are automatically required, this company deserves to be “black listed” at your military base and you should continue your hunt for a more reputable lender. After the fact, especially if you are inexperienced in shopping for a car, if you sincerely feel that you have been the victim of some deceptive business practice, discuss this with your legal office, First Sergeant, or supervisor to see if the contract can be voided. The dealer may comply when given the choice between rescinding the contract and being “blacklisted” at your military base.

Buying A Car With Private Party Financing

I've seen rates as low as 5% recently, but depending on your credit history and market fluctuation you may find something different. Shop around and get a reasonable estimate of what rate you will be able to get for your loan. Bank Rate is a good place to start. They also have an auto loan calculator which will help you determine what cars you can afford.

You need to create a list of the cars you are interested and how much each one will cost you. Then you can plug those numbers into the Bank Rates auto loan calculator to determine your monthly payment, decide what term is reasonable, and see how much more you might have to pay in interest those options will cost you.

Once you have a value in mind you need to apply for the loan. If you did your shopping around in step one then you should already have decided on a place and you can plug in the information you gathered in step two, loan amount, loan term, and whether you are buying from a dealer or a private party. It may take a few weeks to process your application so don't be impatient.

Once you are approved you will usually be given something along the lines of a blank check which will clear up to the amount you have been approved for. You can use this like cash, but be sure to abide by the loan originators guidelines. If it says you can only use it for a new car then don't try and buy a used car, etc.

As far as actually finding a good deal on the car, I recommend looking for a private seller rather than going through a dealership. If you want more information on how to find a good deal, definitely check out Sacramento used cars, which has lots of good information.

You can find the same used cars for thousands less because there is less overhead. It can be a little bit more work and there are definitely things you should watch out for but overall it can be the best deal out there. Which is one of the reasons I like private party auto loans so much more than dealer loans where you do not even have that option.

That's it for today on private party auto loans.