Private Auto Loans

Everyone knows that before buying a new or used car, it would behoove you to secure your auto loan before ever stepping into the dealership. Private auto loans are a way for consumers to borrow money to purchase a car without involving a dealer. Private loans can be issued by credit unions, your local bank branch or can be found through the internet.

By arming yourself with a private auto loan, you will gain more power in your dealer negotiation process. Additionally, when you take the time to secure your own private auto loan, you will not be subject to surprises and hidden fees that you might encounter in the dealership loan application process.



There are some exceptions to the rule. If you are interested in purchasing a used vehicle, the interest rate on a private auto loan is typically 2% point’s higher than private loans for a new car. Additionally, a private auto loan for a used vehicle may actually be higher than the amount charged by getting a loan directly from the dealer. However, you should still prepare for your used car purchase by securing a private auto loan, as it will give you the upper hand when negotiating with dealers.

If you are buying a new car, a private auto loan may be your best option. Although you may want to take advantage of a special dealer incentive of a low APR or zero percent financing, you may not qualify. If that is the case and you try to get financing directly through the dealer, the interest rate they charge you may be higher than a private loan.

Ultimately, whatever rate you secure on your private auto loan will be based on your past credit history. How well you managed your money in the past is the biggest factor for what you will be charged for a private loan through your bank, credit union or other financial institutions.