@Anonymous wrote:
@Anonymous wrote:Is there any difference in getting a loan from a private seller ? Is it harder to qualify ?
I already know Capital One will approve me for $ 30 k for a used car.... but, no private seller loans, only approved dealership as most of you already know.
Just curious how it works.... never done it before with a loan.
Lenders tend to stay away from private sales. The reason is...
No one knows what the car has experienced. There isn't a guarantee that the auto was inspected by a certified technician. Lenders won't know if there are hamsters powering the engine, or if the car will blow up at any time, or if major components are held with duct tape. If there is an issue with the auto the lender may take a huge loss. They gave you a 10k loan- the car breaks down in 1 week and is worthless- you don't want to pay for repairs as it would cost 13k- you tell the lender to get their car- They sell it at auction for 2.5k.
The risk associated with private sales are HUGE! This is why lenders don't care for private sellers.
Edited because I Kant Sp3ll
Everything you posted applies to used car sales too. 
I agree that private party sales are even worse from a financial institutions perspective.
I don't know the full issue with private party sales; however, one thing the branded (and some other) dealers do mostly do is verify and obtain title and outstanding loans / liens against the car. The bank in this case gets the title directly from the dealership, you never see it as the buyer until you pay off the loan.
Private party, you've got to get the title from whoever holds it, the person selling may or may not owe on the car, may or may not pay it off immediately, and may or may not transfer the title correctly.
The individual buying, may or may not be aware of the title issue, and may or may not hand over the title to the lending institution even if they do get it.
Auto loans are secured against the title of the car, with private party sales it's enormously difficult to get not only a clean title, but one that gets transferred cleanly into the new lending insitution's hand. I think from a bank's perspective they'd allow you to get the private sale, then once you obtain the title, you can always go and take a loan out secured against the vehicle, but that cuts out something like 80% of the issue I posted about I think.
I'm sort of curious about this issue myself, if anyone can shed further light on the transactional difference I'd love to hear it.
