Private Sale Car Loans

Private sale car loans are an option if you’re buying a used vehicle from a private seller rather than a car dealer. Read on to find out everything you need to know about getting the finance you need to buy a used vehicle privately in Australia.


How to pay for a private car sale in Australia

You have two main options when you’re buying a vehicle privately – paying cash or getting a car loan. A loan is obviously your only option if you don’t have the cash to buy the vehicle you want.


Can I get car finance for a private sale?

Yes, as long as you meet the lender’s approval criteria. The main concerns of any lender when you’re applying for any loan are that:


1) you can afford to make regular repayments.

This depends on your regular income and expenses. You need to have enough money left over after paying all your other living expenses each month to make your car loan repayments.

You need to be able to do this for the term of your loan. Standard vehicle loan terms in Australia are between 1 and 7 years. You can lower your regular repayments by taking a loan with a longer term, but you’ll pay more interest.


2) you will make your repayments on time if you can afford them.

Your lender will check your credit score when you apply for a car loan. You’ll have a good credit score if you have a track record of paying all your debts on time.

It’s still possible to get a car loan if you have a bad credit score, but you’ll be charged a higher interest rate. Your chances of getting your application rejected are also higher.


3) the used car you are buying privately isn’t too old if you’re using it as security for the loan.

Most car loans are secured loans. This means that the lender can seize and sell the vehicle if you don’t make your repayments.

Most lenders will have restrictions on the age of a vehicle that can be used as security for a loan. That’s because vehicles lose value over time. The lender needs to be confident they will get their money back if they need to repossess and sell it.

Some lenders will approve loans for older used cars, but they’ll charge you a higher interest rate.

Your lender will assess all of these things when you apply for a car loan.


Car loan for private sale

It can be a good idea to get your car loan pre-approved before you start looking to buy a vehicle. This will give you an idea of how much you can afford so you don’t waste your time looking at vehicles that are outside your price range.

A pre-approved loan can also give you more negotiating power with a seller, especially if they want to sell quickly.


Car finance for private sale

Finance for private vehicle sales is available from a wide variety of lenders in the Australian market. It’s a good idea to talk to a car finance broker to find out which lenders would be most likely to approve your application. This can save you a lot of time and hassle.


Is it safe to buy a car from a private seller?

Buying a vehicle from a private seller comes with a bit more risk than buying from a dealer. That’s because dealers have to legally provide you with:

  • a guarantee that there is no money owing on the vehicle.
  • a statutory warranty of 3 months or 5,000 kilometres in most Australian States and Territories, whichever occurs first.
  • a cooling-off period of up to 3 days depending on which State or Territory you’re buying in. During that time, you can change your mind about buying the car before you take ownership.


What to do when buying a car from a private seller

You should make sure you do 3 things to safely buy a car from a private seller.


1) Get a mechanical inspection done.

A good inspection report will give you peace of mind that you’re not buying a lemon. There’s no warranty when you buy a car privately.


2) Check that there is no money owing on the vehicle.

You can do this by checking the Personal Property Securities Register online. Most lenders will check this for you if you are getting the vehicle financed. If you don’t and there is money owing on the vehicle, the seller’s lender can legally repossess and sell the car even if you have bought it. They will do this if the seller stops making the repayments.

If there is money owing on the vehicle and you still want to buy it, you need to ensure that the seller’s loan is paid out before you take ownership. You can do this by arranging for part of the purchase price to be transferred directly to the seller’s lender to fully pay out the loan. The amount left over can be paid to the seller.


3) Ensure the vehicle registration is transferred to your name

You and the seller can arrange this by visiting the relevant government department in your State or Territory, or you can do it online.


Selling a car privately payment

When you get your vehicle loan approved, you need to arrange for the funds to be distributed. The range of transfer options includes:

1) Getting the funds transferred directly from the lender to the seller’s nominated bank account.

2) Getting some of the funds transferred directly to the seller’s lender to pay out the seller’s loan and transferring the balance to the seller.

3) Getting the funds transferred to your bank account for transfer to the seller.

Different lenders will have different fund transfer requirements. They will also usually require you to get comprehensive car insurance as a condition of the approval.

Your lender will register their interest in the vehicle on the Personal Property Securities Register until you have fully repaid your loan.


Buying a secondhand car checklist

Here’s a handy checklist you can use before buying a secondhand car from a private seller.

  • Talk to a car finance broker about getting a pre-approved loan.
  • Start looking for vehicles that are within your budget.
  • Find suitable cars and go for a test drive.
  • Arrange a mechanical inspection for your preferred vehicle.
  • Check the vehicle on the Personal Properties Securities Register.
  • Negotiate the best price with the seller.
  • Arrange the funds transfer with your broker/lender.
  • Transfer the registration to your name.
  • Take out comprehensive insurance from the day you pick up the vehicle.


How we can help

If you’re looking to buy a used vehicle from a private seller and you need finance, talk to one of our licensed brokers at Auto Car Loans. We’ll help you find you a great deal from our panel of over 50 Australian lenders, and we’ll also help you with your application so it’s approved quickly.

Simply call 1300 301 051 during business hours to speak with one of our expert car finance brokers.




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