Automotive

Bank Loan for used car purchase from private seller?

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  • Jan 15th, 2014 11:26 am
[OP]
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Feb 23, 2008
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Bank Loan for used car purchase from private seller?

Can somebody explain how do I go about doing this?

My credit score is good and there are lots of dealer financing available however the vehicles are about 4-5 grand difference between a user dealer and private seller hence Im thinking about buying a car from a craigslist/kijiji deal. Since Im preapproved from my bank for a 5% interest I thought I would take a car loan from the bank. However Im kind of confused on how I can pull this off because the private seller may ask me for cash funds.

Has anyone ever done this before?
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Feb 15, 2008
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Just take out a secured or unsecured LOC. Use that. You're correct in stating that you will have difficulty obtaining a loan against the car itself as collateral. Banks don't generally consider cars to be a very good form of collateral for a loan anyways, as they aren't "nailed down" like a house or stocks/bonds held in custody.

As for cash, once you have the LOC opened, just go to the bank's branch and make a withdrawal.

Remember, when buying a used car, its your responsibility to check for any liens or any encumbrances against the title, etc., and to adjust your offer accordingly.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
[OP]
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Feb 23, 2008
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Mark77 wrote: Just take out a secured or unsecured LOC. Use that. You're correct in stating that you will have difficulty obtaining a loan against the car itself as collateral. Banks don't generally consider cars to be a very good form of collateral for a loan anyways, as they aren't "nailed down" like a house or stocks/bonds held in custody.

As for cash, once you have the LOC opened, just go to the bank's branch and make a withdrawal.

Remember, when buying a used car, its your responsibility to check for any liens or any encumbrances against the title, etc., and to adjust your offer accordingly.
Thanks I do have a LOC but I think its about 8 percent however the Auto Loan is 5 percent and I can pay upto 7 years (not that I plan to) so isn't this auto loan cheaper interest than the loc? As I said Im already pre approved from few banks however it is pretty easy if I go through a used dealer, but doing this for a private seller is where Im lost.
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Feb 2, 2011
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Can't you just show up at the bank and asked for money?
[OP]
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downd wrote: Can't you just show up at the bank and asked for money?
Yeah but for a personal loan which is 8 percent. Auto loan is the cheapest and its quite easy for a dealer since I just need to know which car Im buying and let them know and they will deal with the dealer by giving him a cheque (I think). But with private kijiji seller I need to first negotiate a used car and somehow convince the guy that I will be paying with a loan and not through hard cash and then go to the bank and obtain this pre approved loan and this is where Im lost.
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Feb 15, 2008
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My suggestion would be to go to the bank that you deal with, and ask them. They might be willing to do the auto finance after the purchase. However, you will have to pay for the security registration fee.

For all the money you're going to save up-front, an extra couple percent in interest may not be a big deal. Especially if you plan to pay it off aggressively.

Of course, if you have taxable investments, my suggestion would be generally to sell the taxable investments, and use the proceeds to buy the car. And then re-borrow to re-purchase the taxable investments, thus creating a tax deduction.

Also, if you have interest-bearing deposits in your TFSA or in a taxable account, its a no-brainer to use such to purchase, instead of credit.

Good luck!
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Nov 17, 2004
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In addition to credit score and income, the car that you buy has to meet a certain criteria to qualify for an auto loan from a bank. I believe it usually has to be a car that's under 4 or 5 yrs old, so that it still has enough value to be used as collateral if you can't pay.
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Oct 26, 2008
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Careful!

You are making this sound more complicated than it really is, and auto dealers will find justification for saying, "this is why we charge administration fees".

You would need all your ducks in a row to convince the bank that you are as proficient as a dealership Business Manager and that they are safe to hand over the loan amount to you.

The advice on using your LOC is correct. Just see if you can negotiate that rate down a few points even without making a secured LOC.
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Sep 7, 2010
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MrPerfect wrote: Can somebody explain how do I go about doing this?

My credit score is good and there are lots of dealer financing available however the vehicles are about 4-5 grand difference between a user dealer and private seller hence Im thinking about buying a car from a craigslist/kijiji deal. Since Im preapproved from my bank for a 5% interest I thought I would take a car loan from the bank. However Im kind of confused on how I can pull this off because the private seller may ask me for cash funds.

Has anyone ever done this before?
Certified check from the bank once you get the loan.

Dealer used car prices are high, you can usually negotiate $3-5000 from their price.
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Jun 24, 2006
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YIKES! 5% interest is pretty high for a car purchase.

How much are you looking to spend?
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Jul 31, 2008
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Calgary
I believe what we did was we went in and got preapproved for a loan, so we have access at any time. Then when we were ready to purchase, we came in with the VIN number of the car, model, type, brand, etc., for their info purposes, and the bank cut us a check.
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Oct 5, 2009
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Gutty96 wrote: YIKES! 5% interest is pretty high for a car purchase.

How much are you looking to spend?
Since when?

5% on a USED car is not high at all. 5% is what Prime plus 2%? 5 year mortgage rates are running what 4% or so?
[OP]
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Feb 23, 2008
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karrie_bearrie wrote: I believe what we did was we went in and got preapproved for a loan, so we have access at any time. Then when we were ready to purchase, we came in with the VIN number of the car, model, type, brand, etc., for their info purposes, and the bank cut us a check.
Thank you! It seems I would need to get some purchase agreement from the seller and then go to the bank for this. Any idea if sellers would be ok with this? In your case did you put down any deposit towards the car for the hold till you get this processing done? Basically from the sellers point what is the best way to work with them to accommodate a situation like this? Appreciate if you have any tips or other suggestions.
Nothing is true, everything is permitted - Ezio Auditore.

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