How do I buy a car from a private party with a loan?

On my route to work, there's this car for sale in someone's yard. I currently carpool with my grandpa, but I've been saving up for a car. My credit is okay—not great, but not bad—and I think I can make a pretty good down payment. But I'll need a loan to cover the rest. How do I get a loan to buy a car from an individual?

Answer
You can buy a car from a private party with a loan pretty much the same way you would buy a car with a loan from a dealership.
The main differences are the interest rate might be higher and the loan term may be shorter. Lenders view private party vehicle purchases as riskier than deals done through a dealership, so this is how they mitigate some of that risk.
Before applying for the loan, check your credit score. If it’s less than 660, you may need to find a friend or family member with a better credit score to cosign on the loan in order to get approved.
Another way to up your approval odds is to make a significant down payment. If you can put down 20% of the sticker price, it will help.
Before you buy the car you saw, make sure you have car insurance. It’s illegal to drive without it, even if it’s just off the seller’s lawn.
You can get car insurance fast, like 45 seconds fast, with the Jerry app. Jerry will compare 50+ top insurance companies, like Nationwide, Allstate, Safeco, Progressive, and Travelers, to help you get the coverage you want and at a price you can afford.
Lauren Smith
Answered on Nov 19, 2021
Lauren has written for World Nomads, the Matador Network, Korvia Consulting, and once upon a time Three Fates Games. She graduated from Columbia College of Chicago with a BFA in Creative Writing. After graduating, she moved overseas and lived in South Korea where she spent her free time traveling and going on road trips with friends. She misses the rest stop potatoes and is trying to figure out how to recreate them at home. She's now based outside of Chicago and when she's not writing she spends her free time reading, playing video games, and exploring whenever she can.
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