Getting a private party auto loan is known as direct lending, and it may be a bit more difficult if your credit's suffering – but don't count yourself out just yet.
Who to Go to for Direct Lending
Direct lending comes from banks, credit unions, and online lenders. Though it may seem easiest to just hop online and apply for a few auto loans, give it some thought before you do. Make sure you don't apply for too many loans at once – every time you apply, a lender has to pull your credit. Since you're going to want only a single inquiry on your credit, it's a good idea to limit your search to 14 days. This is seen by lenders as a "rate shopping" window, and multiple credit inquiries made during this period won't be as damaging to your credit, because they're seen as one inquiry.
Before you go searching for just any direct loan, you should start closer to home. It's often easier to get a loan from a bank or a credit union that you have a relationship with, and even more so if you're a member in good standing.
Keep in mind, when you're applying for a private party auto loan and you have bad credit, a credit union may be more willing to work with you than a bank. Banks typically reserve loans for customers with better credit, while credit unions typically offer a little more flexibility with their lending.
If Your Bank isn't an Option
If you aren't able to get a direct loan from your bank or credit union, looking for a direct lender online is often the next step. When applying with a direct lender, your online application is transmitted directly to the lender. If you're approved, you can then take the check they send you to a private seller to purchase a vehicle.
Make sure you know the difference between a direct lender and an indirect lender. An indirect lender is a lender that works through a car dealership. When approved, these lenders don't send you any money or a pre-approval letter, and instead, you interact with the lender through the dealer you've chosen.
Choosing an Indirect Lender
If getting a direct loan doesn't work out so you can buy a vehicle from a private party, this doesn't mean you can't get a car. Indirect lending can be a great option for borrowers with bad credit. Some indirect lenders, called subprime lenders, work to get people the vehicles they need even when they're suffering from credit issues.
The advantage of these lenders is that they look beyond your credit to see what's really going on with your situation. Then, they use factors such as income, employment, and residence stability to offer credit-challenged car buyers the loans they need.
Get Connected with a Dealership Today!
These lenders work through special finance dealerships, but it isn't always clear when a dealer offers this service. That's where The Car Connection comes in – we work with a nationwide network of special finance dealerships that have these lenders available to help.
We help people get connected to a dealer that has the proper lending resources for their situations every day. Let us help you, too. Simply fill out our no-obligation auto loan request form today, and we'll get the process of matching you up with a local dealership!