Lenders That Offer Private-Party Auto Loans
Min. credit score
MyAutoloan - Used car purchase loan
Best for Private-party loans through an aggregator
LightStream - Used car purchase loan
Best for Private-party loans with a direct lender
Our pick for
Private-party loans through an aggregator
Aggregators connect prospective borrowers with a network of auto lenders, usually resulting in more than one loan offer. We evaluate them using different criteria than direct lenders.
- Some lending partners offer pre-qualification with a soft credit check.
- Some network lenders offer rate discount with automatic payment.
- No origination fees.
- Fully online application available for applicants who prefer it.
- Co-borrowers or co-signers are allowed in nearly all cases.
- Not available in Hawaii or Alaska.
- Customer service not available on weekends.
- Doesn’t provide Spanish version of website.
- Minimum annual gross income: $26,100.
- Maximum debt-to-income ratio: Not provided
- Bankruptcy-related restrictions: Must be discharged or dismissed.
- Maximum mileage: 125,000.
- Maximum loan to value ratio: Not provided.
Our pick for
Private-party loans with a direct lender
Direct lenders are banks, credit unions and other companies that work directly with a borrower to make and service loans. We evaluate them using different criteria than aggregators.
- Available in all states.
- Customer service available on Saturday.
- No origination fee.
- Fully online application available.
- Co-borrowers or co-signers allowed.
- No vehicle restrictions.
- No down payment requirements.
- Doesn’t offer pre-qualification with a soft credit check.
- Doesn’t provide a Spanish version of website.
- Minimum annual gross income: None.
- Maximum debt-to-income ratio: Did not disclose.
- Bankruptcy restrictions: Yes. Details not disclosed.
- Maximum mileage: None.
- Maximum loan to value ratio: None.
Want to compare more options? Here are our other top picks:
How does a private-party auto loan work?
Private-party auto loans work like other types of auto loans. You apply and, once approved, receive funds to pay for the car. You then make monthly payments to the lender to pay off the loan.
Here are some differences you may find with a private-party auto loan.
Buying from a private seller can be more time-consuming
With no dealership involved, you will be responsible for many tasks a dealer would usually handle — such as paying sales tax and submitting paperwork to the DMV. Your lender may assist with paying off the seller’s previous car loan and getting the title transferred, but it’s still your responsibility to ensure these are done.
Private-party auto loans tend to have higher interest rates
Lenders perceive buying a car from an individual to be riskier than buying from a dealership, where most cars come with warranties and certifications that a car is in good mechanical condition. For this reason, private-party auto loan rates are usually higher than used-car loan rates at a dealership.
Even so, you may save in other ways when buying a car from an individual. For example, individuals often sell cars for less and may be more willing to negotiate. You also avoid dealer markups or add-ons.
Lender requirements can differ for a private-party auto loan
Check a lender’s maximum vehicle age and mileage, along with the minimum loan amount, to finance the private purchase of a car. Then, ensure the car you want to buy fits the lender’s specific eligibility requirements for a private-party auto loan.
You may need to know the exact car you’re buying
For a private-party auto loan, some lenders require you to know the exact car you’re purchasing before you apply. Other lenders will preapprove private-party auto loans before a car is selected, but you won’t know the exact terms of your loan until you have information about the car and amount you need to borrow.
Getting a preapproved car loan can help you move forward quickly when you do find the right vehicle, and it gives you an idea of the maximum amount you can finance.
How to apply for a private-party auto loan
Once you find a lender that offers private-party auto loans, complete and submit an application as you would with any other type of auto loan. Some lenders require that you apply in a branch, but others have a “private party” option within their standard online auto loan application.
You can expect the lender to ask you for the following at some point in the process. Required information can vary by state.
Vehicle identification number (VIN).
Car year, make, model and mileage.
Copy of the vehicle registration and title or title status.
If the current owner has an outstanding loan balance on the car, written documentation of the pay-off amount from the previous lender.
A bill of sale listing the details of the purchase, sale price, date of sale and names/addresses of the buyer and seller. (This differs by state, so check with your local DMV.)
Funds from a private-party auto loan are disbursed in various ways. Many lenders send funds directly to the previous lender to pay off that loan, with any extra funds forwarded to the seller. Others will give you a check to sign over to the seller and/or the previous lender. A few may deposit the money into your bank account.
As the final step, you must transfer the car’s title and registration into your name and ensure your lender is on the title. Your state’s DMV can tell you how to do this.
If you can’t find a private-party auto loan
If you have the means, paying in cash is one way to purchase a car from a private party.
Another option is to use a personal loan. Some lenders, like LightStream, advertise private-party auto loans that are unsecured, personal loans.
Personal loans don’t use your vehicle as collateral and rely most heavily on your credit history and income for approval, so they can be more challenging to get. Also, unless you have a high credit score, personal loan rates are usually higher than private-party auto loan rates.
If you buy a car from a private seller using cash or a personal loan, there are some benefits. Since the car isn’t used as collateral, you don’t have to worry about vehicle restrictions such as mileage or age. Also, without a lien on the car, you won’t be required to carry full-coverage car insurance on what may be an older vehicle.
Last updated on December 5, 2023
NerdWallet's review process surveys companies that offer any combination of new car purchase loans, used car purchase loans, auto refinance loans (traditional and/or cash-out) and lease buyout loans. These companies include direct lenders and aggregators; the latter group doesn't have in-house loan products but matches borrowers to third-party lenders within a network. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.
Our survey for direct lenders has different questions than the survey for aggregators, but each includes more than 60 data points. NerdWallet independently confirms product details and, when necessary, follows up with company representatives. At least two writers and an editor verify the facts for every lender review to ensure data are accurate.
To receive a star rating, a provider must respond to NerdWallet’s annual auto loans survey. Star ratings are then assessed from poor (one star) to excellent (five stars).
NerdWallet's Lenders That Offer Private-Party Auto Loans
- MyAutoloan - Used car purchase loan: Best for Private-party loans through an aggregator
- LightStream - Used car purchase loan: Best for Private-party loans with a direct lender
- Digital Federal Credit Union - Used car purchase loan: Best for Private-party loans with a direct lender
- PenFed Credit Union - Used car purchase loan: Best for Private-party loans with a direct lender
- Navy Federal Credit Union - Used car purchase loan: Best for Private-party loans with a direct lender
- Alliant Credit Union – Used car purchase loan: Best for Private-party loans with a direct lender