How to finance a car from a private seller

Updated April 17, 2017

Getting financing for a car loan requires careful shopping to get the best possible interest rate. However, securing an auto loan, even with bad credit is relatively easy because the car functions as security on the loan. Additionally, purchasing a car from a private seller will save you a lot of money, as car dealerships include expensive markups in the price of the cars they sell.

Check with the bank where you keep your checking or savings account. Try applying to a credit union if you qualify. Credit unions often offer lower interest rates and minimal fees for financial vehicles like loans. Ask a lending agent at your banking institution about what kind of interest rate they can offer on a private party car loan. You may have to fill out an application to get an accurate interest rate offer.

Contact other auto loan companies and compare interest rates, even if the bank or credit union offers you a car loan. Try checking with your major credit card companies to see if they offer auto loans. Outside auto lenders may offer you a lower interest rate or better repayment terms on the loan. Use better terms from additional lenders as leverage to renegotiate the car loan with your bank.

Apply for a credit card. Unless you are purchasing a brand new vehicle, many credit cards will have a high enough limit to cover the car purchase. Shop for cards that have very low or zero per cent interest rates. These rates will be introductory, so plan your repayment schedule with the interest rate change in mind. Consider transferring the balance of the card you used to purchase the car to a lower rate card if you need a longer repayment schedule for the car.


Credit cards have tricky contracts that can trigger sudden interest rate changes and fees. Only use a credit card to purchase a car from a private seller as a last resort.

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About the Author

Melissa Hopkins began writing for the Southern Illinois University newspaper in 2000, where she won several awards. After completing her Bachelor of Arts in English from Southern Illinois University in Edwardsville, Hopkins moved to San Diego, where she worked as a stringer for various publications with the Pomerado Newspaper Group.