Buying from a private seller can save you money compared to a dealership. But can you still get finance? And what do you need to watch out for?
Here's what you need to know about financing a private car purchase.
Can You Finance a Private Sale?
Yes, absolutely. Many lenders offer finance for private sales, not just dealer purchases. However, there are a few differences to be aware of.
How Private Sale Finance Works
The process is similar to financing through a dealer, with a few extra steps:
- Get pre-approved — know your budget before you start looking
- Find the car — negotiate the price with the seller
- Finalise finance — provide the car details to your lender
- Settlement — the lender pays the seller directly, you sign the paperwork
The key difference is at settlement. With a dealer, this is seamless. With a private sale, the lender needs to verify the seller's details and ensure the car is free of debt (encumbrance) before releasing funds.
What Lenders Check
Before approving a private sale loan, lenders typically verify:
- The car's value — to ensure the loan amount is reasonable
- Encumbrance check — confirming there's no existing debt on the vehicle (PPSR check)
- Seller's identity — that they actually own the car
- Car's condition — some lenders require an inspection for older or high-value vehicles
Potential Hurdles
Older Cars
Some lenders won't finance cars over a certain age. If the car you want is 10+ years old, your options may be more limited (though not impossible).
Lower Loan Amounts
Private sales are often for lower amounts, and some lenders have minimum loan sizes. Check this before you apply.
Settlement Timing
Private sellers often want quick payment. Make sure your lender can settle in a timeframe that works for the seller, or you might lose the car to another buyer.
Protecting Yourself in a Private Sale
Without the consumer protections of a dealer sale, you need to do your homework:
1. PPSR Check
Run a Personal Property Securities Register (PPSR) check to see if there's any money owing on the car. If there is, the lender can repossess it — even from you. A PPSR check costs about $2 and takes minutes at ppsr.gov.au.
2. Verify Ownership
Make sure the seller's name matches the registration papers. Ask to see their ID.
3. Get a Pre-Purchase Inspection
Pay a mechanic to inspect the car before you commit. It's worth the $100-200 to avoid buying someone else's problems.
4. Check the History
Consider a car history report (PPSR, REVs check, or similar) to check for:
- Written-off status
- Odometer discrepancies
- Stolen vehicle records
- Previous interstate registration
5. Get Everything in Writing
Use a proper bill of sale that includes:
- Buyer and seller details
- Car details (make, model, VIN, rego)
- Agreed price
- Date of sale
- Signatures from both parties
Private Sale vs Dealer: Finance Comparison
Quick Comparison
| Factor | Private Sale | Dealer |
| Price | Often lower | Higher (dealer margin) |
| Finance Options | Available, fewer lenders | Widely available |
| Consumer Protection | Limited (buyer beware) | Statutory warranties |
| Convenience | More legwork | One-stop shop |
The Bottom Line
Financing a private sale is definitely possible and can save you money. Just make sure you protect yourself with proper checks, and work with a lender (or broker) who's experienced with private sale finance.
Looking to finance a private purchase? Get in touch and we'll help you through the process — from pre-approval to settlement.
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