Many major banks, credit unions, and online lenders offer private party auto loan options. Here are some of the top lenders to consider based on factors like interest rates, fees, loan amounts, and customer satisfaction:
| Lender | Starting APR | Loan Amounts | Loan Terms | Minimum Credit Score |
|---|---|---|---|---|
| Autopay | 4.76% | $2,500 – $100,000 | 24 – 96 months | 560 |
| PenFed Credit Union | 5.24% | $500 – $150,000 | 36 – 84 months | 650 |
| myAutoloan | 5.99% | Up to $100,000 | Up to 84 months | 500 |
| LightStream | 6.99% | $5,000 – $100,000 | 24 – 84 months | 660 |
| Digital Federal Credit Union | 6.99% | Up to $100,000 | Up to 84 months | 600 |
| Bank of America | 7.39% | $7,500 – $100,000 | 12 – 75 months | Not disclosed |
| Ally Bank | 8.64% | $8,000 – $100,000 | 12 – 75 months | 600 |
| PNC Bank | 7.49% (as of 3/16/2024) | Not specified | 12 – 84 months | Not disclosed |
| Consumers Credit Union | 5.74% | Up to $100,000 | Up to 84 months | 600 |
| LendingClub | 8.05% | $4,000 – $55,000 | 24 – 60 months | 510 |
Table of Contents
Autopay
- Starting APR: 4.76%
- Loan Amounts: $2,500 – $100,000
- Loan Terms: 24 – 96 months
- Minimum Credit Score: 560
PenFed Credit Union
- Starting APR: 5.24%
- Loan Amounts: $500 – $150,000
- Loan Terms: 36 – 84 months
- Minimum Credit Score: 650
myAutoloan
- Starting APR: 5.99%
- Loan Amounts: Up to $100,000
- Loan Terms: Up to 84 months
- Minimum Credit Score: 500
LightStream
- Starting APR: 6.99%
- Loan Amounts: $5,000 – $100,000
- Loan Terms: 24 – 84 months
- Minimum Credit Score: 660
Digital Federal Credit Union
- Starting APR: 6.99%
- Loan Amounts: Up to $100,000
- Loan Terms: Up to 84 months
- Minimum Credit Score: 600
Bank of America
- Starting APR: 7.39%
- Loan Amounts: $7,500 – $100,000
- Loan Terms: 12 – 75 months
- Minimum Credit Score: Not disclosed
Ally Bank
- Starting APR: 8.64%
- Loan Amounts: $8,000 – $100,000
- Loan Terms: 12 – 75 months
- Minimum Credit Score: 600
PNC Bank
- Starting APR: 7.49% (rates as of 3/16/2024)
- Loan Amounts: Not specified
- Loan Terms: 12 – 84 months
- Minimum Credit Score: Not disclosed
Consumers Credit Union
- Starting APR: 5.74%
- Loan Amounts: Up to $100,000
- Loan Terms: Up to 84 months
- Minimum Credit Score: 600
LendingClub
- Starting APR: 8.05%
- Loan Amounts: $4,000 – $55,000
- Loan Terms: 24 – 60 months
- Minimum Credit Score: 510
Related Articles:
Top Trusted Reviews For Private Party Auto Loans
If you’re curious which of these lenders is the best fit for you or has the best reputation, I found a few trusted sites that offer some extensive reviews on the above lenders that I highly recommend checking out:
NerdWallet has a dedicated article reviewing and rating the top 6 lenders for private party auto loans. They provide details on APRs, loan amounts, minimum credit score requirements, and pros/cons for each lender.
- Money.com – https://money.com/best-private-party-auto-loans/
Money.com’s article goes in-depth on the best lenders offering private party loans, including myAutoloan, LightStream, Digital Federal Credit Union, and Bank of America. They explain how they selected and rated each lender.
MarketWatch provides a comprehensive guide to private party auto loans, including their top lender picks like Autopay, PenFed Credit Union, myAutoloan, and Digital Federal Credit Union. They cover key details on rates, amounts, terms and availability.
What is a Private Party Auto Loan?
A private party auto loan is a type of vehicle financing that allows you to purchase a car from an individual private seller rather than a dealership.
These loans work similarly to traditional auto loans from banks and credit unions, but with a few key differences:
- You work directly with the lender instead of going through a dealership
- Interest rates are typically higher than dealer-sourced loans
- There are often restrictions on the age and mileage of the vehicle
What’s The Maximum Loan Amount?
From my research, the maximum loan amount offered for private party auto loans is $100,000. However, many of the lenders did not list a maximum amount, so those with excellent credit might be eligible for a higher amount.
Private party loans are secured loans, meaning the vehicle you purchase acts as collateral. If you default on the loan, the lender can repossess the car.
Lender Vehicle Restrictions For Private Party Auto Loans
| Restriction Type | Typical Restrictions |
|---|---|
| Age Restrictions | – Maximum vehicle age for financing: 8-10 years from the current model year, with some exceptions up to 12 years for certain borrowers. – Vehicles over 10-12 years old are generally not eligible for financing. |
| Mileage Restrictions | – Maximum mileage for financing: commonly 100,000-125,000 miles. – Lower caps (80,000-100,000 miles) may apply for older vehicles. – Extremely high mileage (over 150,000 miles) vehicles are very difficult to finance. |
| Risk Considerations | Vehicles under 5 years old with less than 60,000 miles are considered lowest risk. Older and higher-mileage vehicles face tighter restrictions and requirements. |
How to Get A Private Party Auto Loan?
Eligibility Requirments
here are the typical eligibility criteria lenders look at for private party auto loans:
Credit Score Requirements:
- Most lenders require a minimum credit score in the 600-700 range for private party auto loans, though some allow scores as low as 500-600 for subprime borrowers with higher interest rates.
- Those with excellent credit scores of 720+ will qualify for the best rates and terms.
Income Requirements:
- Lenders want to see you have enough steady income to afford the monthly loan payments, usually looking for a minimum gross monthly income of $1,500-$2,000+.
- They’ll look at your debt-to-income ratio to ensure you don’t have too many other obligations.
Down Payment:
- Many lenders require a down payment for private party loans, often 10-20% of the vehicle’s selling price.
- A larger down payment can help offset risk for borrowers with lower credit scores.
Other Requirements:
- No open bankruptcies or recent vehicle repossessions
- Proof of income, residency and identity
- Some lenders require membership like joining a credit union
The Process
The process for getting a private party auto loan is fairly straightforward:
- Find the car you want to buy: Identify the specific used vehicle from a private seller and get details like the make, model, year, mileage, and VIN number.
- Shop lenders and apply: Research our list of different banks, credit unions, and online lenders that offer private-party auto loans. Compare interest rates, fees, loan terms, and eligibility requirements. You can often get pre-approved before selecting a vehicle.
- Get approved and finalize the sale: Once approved, the lender will provide the loan amount to the seller. You’ll then transfer ownership of the vehicle into your name.
- Make payments on your loan: Like a traditional auto loan, you’ll make monthly payments of principal and interest to the lender over the agreed loan term, usually 3-6 years.
Alternatives to Private Party Auto Loans
While buying a used car from a private seller has many benefits, it’s just not always possible for everyone for whatever reason.
Depending on your situation, one of these alternatives may be a better fit:
Dealership Financing
Getting an auto loan through a dealership can sometimes yield lower interest rates than private party loans, especially if you have great credit. However, you’ll pay more for the vehicle itself and enjoy the process less than compared to a private seller.
Personal Loan
Some borrowers use a personal loan from a bank, credit union, or online lender to fund a private party car purchase. Personal loans don’t use the vehicle as collateral, but rates are often higher than auto loans.
Home Equity Loan/HELOC
If you have sufficient home equity, you can use a home equity loan or line of credit to get a lump sum for purchasing a vehicle. These secured loans tend to have lower rates but put your home at risk.
Cash Purchase
The simplest option is saving up enough cash to pay the private seller the full amount upfront and avoid a loan altogether. This eliminates interest charges but requires patience.
Lease
Instead of purchasing a used vehicle, you could opt to lease a new vehicle from a dealership. Leases typically require little or no down payment and have lower monthly payments than financing.
Factors to Consider When Shopping for a Private Party Loan
When evaluating different private party auto loan options, there are several key factors to keep in mind:
Interest Rates: Private party loan rates are typically higher than dealer-sourced financing, often starting around 5-7% APR for qualified borrowers. Those with lower credit scores can expect even higher rates.
Fees: Many lenders charge fees like an origination fee or prepayment penalties. Be sure to understand all the fees involved.
Loan Term: Longer loan terms (5-7 years) will have lower monthly payments but more interest paid over the life of the loan. Shorter terms (3-4 years) have higher payments but less total interest.
Age/Mileage Restrictions: As we mentioned above, most lenders have limits on the age and mileage of vehicles they’ll finance through a private party loan, such as no more than 8-10 years old or 100,000 miles.
Down Payment: Some lenders require a down payment, often 10-20% of the vehicle’s value. This reduces the loan amount and total interest paid.
Credit Score Requirements: Better credit scores (700+) qualify for the lowest possible interest rates. Lenders have varying minimum score requirements.
Additional Considerations
Beyond the loan itself, there are a few other factors to keep in mind when buying a used car from a private party:
- Vehicle History Report: Always obtain a vehicle history report like CARFAX to check for past accidents, ownership history, open recalls, etc. Private parties are harder to hold responsible for misrepresentations.
- Vehicle Inspection: Have the car inspected by a mechanic you trust before finalizing the purchase.
- Title Transfer: You’ll need to properly transfer the vehicle’s title into your name through your state’s DMV on your own because there isn’t a dealer to do it for you.
- Auto Insurance: Get insurance lined up before taking ownership of the vehicle.
Private Party Auto Loans With Bad Credit
Some lenders that may approve private party auto loans for bad credit borrowers include myAutoloan, Auto Credit Express, Autopay, and certain credit unions like PenFed and Digital Federal Credit Union.
However, requirements like minimum income and down payment will likely apply.
My Final Thoughts
I can only hope I answered all your questions about Private Party auto loans along with offering you an extensive list of some of the top banks and lenders that offer them to get you started.
Remember: Like any type of financing, its not always for everyone and you should always do your own research and due diligence before committing to any long term financial obligations.
Sources For This Article
- https://www.reddit.com/r/askcarsales/comments/whsrov/buyer_wants_to_purchase_through_a_private_party/
- https://www.reddit.com/r/personalfinance/comments/3ey8jx/how_do_people_finance_used_cars_from_a_private/?rdt=35207
- https://www.reddit.com/r/askcarsales/comments/12c15g4/how_do_i_get_a_car_loan_for_a_private_party_sell/?rdt=44062
- https://www.cnbc.com/select/best-car-loans/
- https://www.cnet.com/personal-finance/loans/auto-loans/best-car-loans-and-lenders/
