Written by S. Thompson | Posted in Loans |

Private Party Auto Loan

This type of loan can be taken out when you are purchasing your car from a private individual (directly from the owner) and not from a car dealer. Though there are a lot of similarities with this type of loan and the loan you would take out to purchase a car from a dealership there are still some marked differences which are noted in the loan terms, the interest rates, down payments and taxes and registration etc.

With a private party auto loan you will see fewer terms in the contract than if you were getting the loan to make a purchase from a dealership. You will find that your loan of this nature can only be for a maximum of 48 months whereas with a regular loan you have a maximum of 72 months. But this gives the advantage of paying less in interest charges since the longer the term the more the interest.

Your interest rates will naturally be higher than if you were getting the loan for a dealership but your interest rate is set according to your credit score. So the better your credit score the better your chances of getting a lower interest rate. If you know you have a good credit score you should bring a copy of your credit report when you are applying for the loan so that they can set your interest rates at the best rate possible.

Though a deposit is not always a requirement it would be in your best interest to pay one of no less than 20%. If you can’t afford this then at least make a deposit that would be equal to a monthly payment. This way you won’t end up owing for a loan that is more than what the worth of the car is.

These loans do not allow for you to include the fees that are related with title registration and taxes into the loan total like a loan that you would get for a dealership so you will have to pay for this yourself. This may reduce the amount you have for a down payment but try your best to make as big a down payment as possible.

It will take up to two weeks to have your name on the title of a car when you are paying through private party auto loans, whereas with other loans where you buy from the dealership your name goes on the title right away.
The information given here is to help guide through the inner workings of such a loan so that you can make the right decision when it comes to purchasing a motor vehicle.

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