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Financing a private auto sale

You've found the car you want and it's for sale by a private owner. Now you need the financing.

There's no need to worry. Landing a private auto loan is a lot easier than you think. The most important ingredient that you need is a little patience, since there is quite a bit of paperwork to fill out. And while your loan might be approved immediately, it could take a couple weeks or more before you drive away with your car.

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Once you get your hands on the keys, your first trip should be straight to the Department of Motor Vehicles to register the car in your name.

A short wait can pay off
With a private loan, you may not get the instant gratification of walking into a car dealership and driving away with a car, but there's a good chance you'll get the car you want at a better price.

If you buy the exact same used car at a dealer, you'll likely need to shell out a lot more money -- as much as $1,000 or more.

And thanks to private auto loans, you don't need thousands of dollars on hand to close a deal.

Here's what you need to know to pull off a private auto loan without a hitch.

Shop around for the best loan
It's best to start close to home.

"Start with a bank or credit union where your checking account is," says James Walsh, author of "Smart Wheels, Hot Deals: Buying, Leasing and Insuring the Best Car for the Least Money."

That's exactly what Mark Hodgson of San Diego did. After finding the BMW M Coupe he wanted on AutoTrader.com, he started looking for financing. His first stop was the credit union at his old college, the University of Wisconsin, and then another credit union in San Diego.

With those rates in hand, he hopped online and tried Capital One Auto Finance, formerly PeopleFirst.com. Capital One Auto Finance offered him a slightly lower rate than either credit union, so he went with it.

Once he chose the lender, the rest of the process, which included getting the seller's title released from BMW of North America, took just a week and a half.

"They're very easy steps, what you have to do," Hodgson says.

A few hurdles
The hardest part may be getting approved for a loan. Only folks with good credit are likely to be approved for a private auto loan.

You'll also pay a little bit more for financing. The rates on person-to-person auto loans tend to be slightly higher than rates you'd pay on other used car loans.


-- Posted: Nov. 5, 2003




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