Private Party Auto Loans
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Since most of us, myself included, don't have a safe with a big stack of cash in it we need to finance our auto purchases. Most people go with dealership financing but there is another option. Private party auto loans are often a more practical solution depending on your situation. In General here are some of the major differences between the two types of loans.
Loan Terms
Private Lenders typically offer loans between 24 and 48 months. That is much shorter than the typical 72 month dealership auto loan term.
The end result is for the same principal you will have higher payments on a private party loan but generally pay only a fraction of the overall interest.
Higher Interest Rates
Interest rates are on average higher for private party auto loans. This is due to the shorter loan terms as well as the acceptance of more risky borrowers. Don't worry too much though the difference is not huge and in many cases if you shop around you can find a loan rate that is on par or lower than your local dealership.
Loan Approval Prior To Purchase
In general you go through the loan approval process before you start seriously shopping for a car. Instead of picking out a car and then applying for financing which is the common practice with dealership loans. The result is more flexibility and negotiating power when you are actually shopping.
Furthermore since all of the loan processing is done before committing to buy a car, buyers with less than perfect credit do not have to worry about finding the perfect car only to be told after the fact that they cannot actually afford it.
Freedom To Buy From Private Sellers
The difference between buying the same car at a dealership or from a private seller is typically thousands of dollars. Many people think they can't go the private party route because they cannot finance their purchase, but private party auto loans do just that.
Article Source: Articlelogy.com
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