Most Popular Sports Cars

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.

Length Of The Loan

Dealership lenders typically offer loans of long terms, between 48 and 72 months. That is four to six years. On the other hand the typical private party auto loan is only 36 months.

This means that given the same amount of money you will pay higher monthly payments but overall only a fraction of the interest with a typical private party auto loan.

Higher APR

On average interest rates are higher on private party loans compared to dealership loans. This may be misleading because private party loans accept people with lower credit scores but charge higher interest rates. If you have good credit you can usually find a rate that is comparable to what you could get through a dealer.

Get Approved Before You Buy

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.

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.