Let us tell you right off the bat that getting a private party loan isn’t easy. Most lenders aren’t willing to offer private party loans to people with a bad credit.
However, we will try to help you figure out a way to get a private party loan on a bad credit in this post.
What Is a Private Party Loan?
For those that don’t already know, a private party loan is basically getting a loan to purchase a car from an individual or private party instead of a dealership.
Many different types of lenders offer private party loans like banks, financial institutions, credit unions and more. However, as mentioned above, it may be difficult to get a private party loan from any of them on a bad credit.
Buying from a Licensed Dealer
Typically, private party digital marketing loans are financed by direct lenders. However, most direct lenders avoid financing those with a bad credit.
So for people looking to get a private party loan on a bad credit, the only option may be a subprime lender. These lenders do offer loans to people with poor credit, but they usually don’t work with the borrowers directly but through licensed dealerships.
This is because working through dealerships helps them satisfy two main requirements as explained below.
Helps Offset Extra Risk
While subprime lenders are willing to offer loans to people with a bad credit, they do want to safeguard themselves against the extra risk associated with it. Working with licensed dealerships helps them do this.
The dealerships verify all the important information of the borrowers like their income, job, residence details and more. They also try to make sure that a particular borrower can afford a loan given their current financial situation despite their bad credit.
Furthermore, the dealers also collect all the important documents that the subprime lenders would require as proof for offering a private party loan to them.
Verify the Accuracy of the Vehicle Information
Dealers also help subprime lenders verify all the information about the vehicle being financed, such as the model, make, year, mileage and more.
As a rule of thumb, subprime lenders don’t finance vehicles with branded titles, and the responsibility of ensuring the title is clean is taken care of by the dealers.
A Final Word
As explained above, subprime lenders typically don’t finance private party vehicle loans but only the vehicles purchased through licensed dealerships. This is because it would get very difficult for them to verify the above important information which forms the basis of offering a loan despite the bad credit of the borrower.
That said, however, there may be some exceptions if your credit score isn’t too bad and you search hard enough.