Can I get a car loan for a private sale?
Found your dream car that makes your heart race but it’s being sold privately? Don’t stress that it will be impossible to finance, as you can get a car loan for a private sale. However, there are a few things you need to consider before the deal is done.
Here’s what you need to know about private sale car loans.
Private sale car finance
Buying a used car privately can be a great way of scoring some significant savings on a new set of wheels. There’s usually more room for negotiation on price and it’s the previous owner who takes the depreciation hit, not you.
That said, it’s not without risk as the car won’t come with warranties or other protections that dealer sales typically have. So you’ve always got the worry you’re paying too much for an unsafe old banger, repairable write-off, stolen vehicle or worse.
Many lenders view used private sales as riskier too. There’s more chance the car will get written off if it gets in an accident and they’ll want to check the seller is the rightful owner before providing the funds.
As a result, lenders typically:
- Ask for additional documentation from the vendor (see below)
- Have maximum age limits on the used car
- Charge you a higher interest rate to cover their backs should it all go wrong.
Other lenders may offer you an unsecured personal loan rather than private sale vehicle finance. While you can finance a used car this way, you’ll likely get stung with a much higher rate than if National Loans had found you a great private sale car loan.
What do I need to do to get a private sale car loan?
Buying a privately-sold used car with finance can involve a few more hoops to jump through than going through a dealer. However, it needn’t be a headache as National Loans can do all the hard work for you – from comparing all your options in the market so you get the best deal possible to liaising with the seller to get all the right documentation in place.
- Apply for pre-approval – so you can shop with confidence
- Find a car that meets all the lender’s requirements – while requirements vary from lender to lender, typically the car cannot be more than 15 to 20 years old at the end of the loan.
- Sign the loan documents and submit all the documents – so settlement can take place and you can drive away in your new car
What documents does the seller need to provide?
The lender will want to know everything is above board with the car you’re purchasing, so will require additional information before the deal goes through. This can include:
- The car’s registration certificate
- The vendor’s drivers licence and proof of banking details
- Current financier ‘payout letter’ if applicable
- Vehicle inspection report.
- A copy of the sale agreement
The vehicle inspection will normally involve a check against the Property Securities Register (PPSR) to see if the car has an outstanding financial interest (also known as an encumbrance) or has been previously written off or stolen.
What happens if the car is already under finance?
Don’t worry if the used car you have fallen in love with is already under finance, as the loan can still proceed as normal. For that to happen your vendor will have to either:
- Pay out the loan themselves – which usually make the process quicker but does depend on the seller having available funds.
- Provide a payout letter from their existing lender – which details the current finance arrangement and includes a statement from the lender that they’ll lift their interest over the car (as detailed on the PPSR register) once full payment is received.
It normally takes a few business days after settlement for the previous lender to release their interest over the car. Once this is done, you’ll then have 14 days to transfer the ownership of the car into your name.
Need a car loan for a private sale? Speak to the experts at National Loans. Click here for a free online quote. If you want help, please fill in this online form or contact National Loans on 1300 358 358.