The only way to finance a car from a private seller is to get a direct loan. This can be difficult if you have bad credit, but it’s not impossible. Here are a few options you can start with.

Go to Someone You Know

When you’re dealing with bad credit, the best place to start looking for a direct loan is from a lender at a financial institution you already have an account with. When you have an account in good standing at either a bank or a credit union, it can be easier to begin the process of getting an auto loan. There are some differences between banks and credit unions, however, and it may be easier to get approved from a credit union.

Getting Financing from a Credit Union

meeting with a lenderCredit unions are member-owned, not-for-profit organizations. Typically, this means they’re able to focus on customer service, and keep costs low for things like new accounts and account services and upkeep. Because of this, they’re often able to pass these low costs on to their members when they’re looking for things like an auto loan. Because of their non-profit status, credit unions can also pass these benefits to their members in the form of lower interest rates on auto loans and credit cards.

Sitting down with a credit union representative face to face often helps your chances for a car loan, especially if you’re already a member in good standing – and most credit unions do require this. In the past, credit unions only offered membership to people with certain affiliations, such as religious groups or fraternal organizations, or to people in certain areas or specific careers. These days, the requirements aren’t always as strict, and many people can enjoy the benefits of belonging to a credit union.

Financing from a Bank

Banks are typically large, publicly-owned businesses. They’re responsible to their shareholders and usually focus on profit. Having an account with a bank usually means dealing with bank fees as well. These fees can be much higher than similar fees at a credit union. In fact, most banks charge services fees like minimum balance fees, ATM fees, monthly maintenance fees, and transfer fees, among others. These same services typically don’t cost you anything at a credit union.

However, since banks are larger than credit unions, they tend to get their money at a lower rate, which allows them to have competitively priced loans. But just because they can competitively price a loan doesn’t mean they will. Banks tend to approve auto loans only for people with good to excellent credit.

Buying a Car from a Private Seller

If you’re fortunate enough to qualify for a direct loan from a bank or credit union, you can take this approval to finance a car from a private seller. Be aware, however, that cars bought from a private seller will need to be licensed, registered, and insured. Also, be aware that a vehicle from a private seller comes with no warranty or service contract, so if something happens to it right away, you could be out a car while still paying on a loan.

Let Us Help You Find Financing

When it comes to auto financing, a car loan can be a great way to build credit. If you’ve been turned down for a direct loan, but still need a car, Auto Credit Express is here to help. We work with a nationwide network of special finance dealers that have subprime lenders available to help people who are struggling with credit problems. Fill out our online auto loan request form today to get the process started.