Discover if you can get car finance for a private sale. Find out all about lender requirements, finance options, and the differences with private purchases.
Found a great car from a private seller but wondering if you can still get car finance? You’re not alone – many people spot their dream car outside a dealership and wonder how to make it happen. The good news? Financing a car bought in a private sale is possible with some lenders!
Here, we’ll guide you through what to expect, the ins and outs of getting car finance for a private sale, and what lenders usually look for. By the end, you’ll have a clearer picture of how to get those keys in your hand – dealership or not.
Yes, you can get car finance for a private sale – it just works a bit differently than going through a dealership. Some lenders are open to offering finance on private sales, so if you’ve found a car you love through a private seller, you’re not limited in options.
Getting the approval you need for car finance for a private sale usually depends on a few key factors, including:
the lender’s policies
your credit history
the vehicle itself
Each lender has their own way of doing things, so make sure you’ve got all the right paperwork ready to make things run smoothly.
If you’re getting car finance for a private sale, there are a few extra checks involved to make sure everything’s in order. Lenders will often ask for details about the car’s history, like previous ownership and accident records, and they’ll need proof that there aren’t any outstanding debts on it.
You’ll also need to share some essential paperwork with your lender including the V5 logbook, proof of clear ownership, and identity verification for the seller. Plus, some lenders will require an inspection of the vehicle before signing off on the finance. It might feel like extra steps, but it helps make sure your private sale is as smooth and secure as possible.
When buying a car from a private seller, you have a few finance options. Here’s a quick look:
Personal loan
A personal loan is often used for private sales since it’s flexible and can be deposited directly into your account. You own the car from the get-go, and there’s no need for a deposit. Since it’s an unsecured loan, no collateral is required, but this means interest rates can be a bit higher, especially if your credit score isn’t perfect.
Personal contract purchase (PCP)
PCP could work for a private sale, though it's usually less common than with dealerships. With PCP, you’ll typically make lower monthly payments since you’re financing only the car’s depreciation, not its full value. At the end, you can return the car, trade it, or make a final payment to own it. However, PCP finance might not be available for older cars, which are fairly common in private sales.
Hire purchase (HP)
HP finance is a frequently used option for private car sales. With HP, you’ll pay a deposit upfront and then monthly instalments, with the car becoming yours after the final payment. Lenders are usually more flexible with HP for private sales, but keep in mind that the car technically belongs to the lender until the agreement is complete.
Buying a car from a private seller is a bit different than buying from a dealership, and there are pros and cons to each approach. With a private sale, you’re likely to get a lower price since there’s no dealer markup — after all, private sellers aren’t usually in it for profit. However, that also means you’re giving up some of the protections you’d normally get when you buy a car at a dealership.
Dealerships often include warranties or guarantees on cars, giving you extra peace of mind if something goes wrong shortly after purchase. Private sales don’t usually come with this assurance, so it’s up to you to do a bit more research, like checking the car’s history and arranging any inspections. If you’re comfortable with that trade-off, a private sale could be a more budget-friendly way to get the car you want.
Financing a car from a private seller is possible, and it just takes a bit of extra know-how to get it right. Making sure you’ve got all the right paperwork, checking the car’s background, and finding the best finance option for you means you can drive away with peace of mind.
If you’re ready to take the next step, find out why a car loan could help you start the journey to owning your car outright.
