Getting a Loan for Buying a Car from a Private Seller in PA

Updated on May 19, 2021

While you need to go to a car dealership to purchase a new car, you can opt to buy from a private seller if you want a used vehicle. If you’ve only bought from a dealership in the past, you may be wondering what this process entails. It isn’t as complicated as you may think. 

Though you’ll need to take care of some of the legwork on your own, such as executing a title transfer, getting a vehicle history report, and securing your own financing, buying privately may be the best option for you if you find a “new-to-you” car that meets your needs and fits within your budget.

Are you considering this route for your next car purchase? Here are some helpful things to consider when buying a car from a private seller. 

Doing Your Research

Take the time to do your research, just like you would if you were visiting a dealership. Use technology to your advantage, and look up different makes or models of vehicles you’re considering. You can use online comparison tools to help determine which car has the features you want, and review other considerations, like safety or fuel efficiency ratings. Use reputable websites, like Kelley Blue Book®, to determine a vehicle’s estimated value and ensure you’re paying a fair amount for your new ride. 

See the vehicle in person whenever possible. Unfortunately, not everyone has the best of intentions. Be cautious of online car sales or private sellers that don’t allow you to see the car in person before making a payment or wiring money. Oftentimes, these are scams – and once you make a payment, the seller will disappear, leaving you without a car and the money you’d spent on it. You can ask to see the vehicle’s registration and title, too, to ensure the name on the documents matches the name of the person selling the car.

Be sure to take any vehicles you’re considering for a test drive. You’ll want to make sure you like the way the car handles. You’ll also want to ensure that the vehicle matches the description provided by the seller. The best way to test drive a vehicle is to mimic your daily routine. Make sure you can see clearly out of the vehicle and that it’s comfortable for all members of your family. Take stock of the vehicle’s overall condition, like the wear of the tires, evidence of leaks, or if there’s any chipping paint. If its condition isn’t up to par, you may want to negotiate a lower price or walk away.

Once you’ve found the car you want, don’t hesitate to ask the owner for service records, or have a trusted mechanic look over the vehicle. The service records will show you how well the car has been maintained by its current owner. If you’re not car-savvy, having a mechanic inspect the vehicle may help determine if there are any mechanical issues that you may not notice.

Determining Value and Price

After you decide you want to buy, you’ll need to make sure you’re paying a fair price for the car. You don’t want to overpay, and you may have trouble securing a loan if you agree to pay too much. 

Lenders may have different limits on how much financing they’ll provide for a used car. We offer loans for up to 100% of the retail value for a used car based on Kelley Blue Book^® (KBB) or other authorized guide’s value, as long as the car has a minimum value of $3,000. This means that if KBB determines the retail value of your chosen car is $10,000, but the buyer wants $11,000, you’ll only be able to finance $10,000 with us at the advertised lowest rate, if approved.

If you’re financing a used car for more than 100% of its retail value, you may still secure a loan from PSECU, but will need to pay a higher interest rate. Keep in mind that we won’t finance a used vehicle for more than 130% of its KBB value. If you want to avoid the higher interest rate, you can negotiate your way to a better price, walk away from a possible deal if the seller won’t come down, or decide to pay the price above its retail value out of pocket.

Getting Prequalified for a Used Car Loan

Before shopping around, you may want to get prequalified for a car loan so you know how much you can afford. When you purchase a car from a dealer, you can finance directly through the dealership, but you don’t have that option when you buy from a private seller. You’ll need to secure a loan through a financial institution.

You can apply for an auto loan from PSECU whether you’re buying a car through a dealership or a private seller. You can finance up to 120 months, depending on the price of the vehicle, though choosing a shorter loan term will typically give you a lower interest rate, saving you money. 

Give us a call to determine the best approach for your circumstances. The answer will depend on your current financial situation, your credit history, and how long you plan to take to repay the loan. 

If you’re not a member of PSECU, you can join and apply for your vehicle loan at the same time.

Remember that you’ll have a few additional steps left after you lock in your financing. If purchasing in Pennsylvania, be sure to follow the Pennsylvania Department of Motor Vehicles’ (PennDOT) guidelines to ensure a legal transfer of the car once you have the financing lined up. 

Securing a Vehicle History Report

Before purchasing a used vehicle, you should look up its vehicle history report to learn more about its condition. You’ll want to know if it’s been in any major accidents that could impact the life of the vehicle and if it has a clean title, meaning it hasn’t considered totaled. Not only will major incidents impact the vehicle’s value, it may impact your ability to get car insurance or financing. To retrieve this information, you’ll either need the vehicle identification number (VIN) or the license plate number when completing the vehicle history search on a site like AutoCheck^®.

If purchasing in Pennsylvania, you may also want to fill out a request for vehicle information through PennDOT to confirm the car owner, make sure the mileage is correct, and to see if there are any liens against the car.  

Ordering a Title Transfer

You’ll need to accompany the seller to the PennDOT office nearest you to order a title transfer. You should both bring a valid driver’s license. The seller should bring the title for the car, as well. 

In front of a PennDOT agent, you’ll fill out your name and address on the back of the title. You’ll also sign it and give information on the lienholder, or loan lender, on the back of the title. Then you’ll need to pay for taxes and title fees, as well as provide proof of insurance. Be sure to call your insurance agent beforehand to secure this. 

Get Your Used Car Loan Today From PSECU

We want to make the car buying process as stress-free as possible. With flexible loan terms, competitive auto loan rates, and a quick approval process, you’ll have the flexibility to buy a new ride whenever you’re ready. Contact PSECU to learn more about your loan options when you buy from a private seller in Pennsylvania. 

To find additional tips on saving money, visit our WalletWorks page.

Kelley Blue Book^® is a registered trademark of Kelley Blue Book Co., Inc.