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Can You Finance a Car You Buy on Craiglist?

Yes, you can finance a car that you found on Craigslist, but you’ll have to find the right bank or lender. Some lenders will only finance vehicles purchased from approved dealerships. In some cases, you can’t even finance a car from an independent dealership. Instead, you must purchase through a franchise dealership that is part of the bank or lender’s partner network. Here are a few lenders that do offer private party auto loans:

It is best to contact the lender and find out whether they will finance a Craigslist purchase, and what information they will need, such as year, make, model, mileage, VIN, and more. Typically, you will need this information prior to application. Once approved, you will be able to pick up your check from your local branch office.

Typical Guidelines for Approval

Typically, where you find the car does not affect whether you will be approved for a loan or not, though in general, it’s more difficult to be approved for a used vehicle than a brand new one. The vehicle’s condition, age of the car, your credit, and your income are the important factors for you to worry about. Lenders use many guidelines during the approval process, and those for private party or Craigslist auto loans may differ from those of dealership purchases. Some of the most common guidelines are:

  • Loan to car’s value (LTV):  a maximum of 115 percent.
  • Age of vehicle:  no more than 8 years old.
  • Term of loans:  36-72 months, based on vehicle age.
  • Vehicle Mileage:  100,000 or less.
  • Down payment:  at least 10 percent or $1,000.
  • Time on job:  two years on the same job, preferably, or within the same industry.
  • Time at residence:  also two years.
  • Monthly income before taxes:  usually $2,500 at minimum.
  • Credit score/profile:  680 or higher.

If your credit score or income aren’t up to par, you may have a difficult time getting approved for this type of loan. You may be better off buying from a dealership, where lower credit scores aren’t an issue. We can help you in this area.

Important Considerations

You will want to meet the seller in a public place during the day. Many people have regretted not doing so. Be sure to take a friend or family member along, as well. When buying a car from any private party, you need to take the vehicle to a qualified mechanic prior to buying it.

You will need to call your chosen lender to find out what items they need for the loan process. For example, you may need a VIN or a written agreement stating the sale price, among other things. You will need to know if there is a current lien on the vehicle. If so, your lender will contact the lien holder in order to clear the lien.

Even if you are denied by a large lenders and local credit unions, you can still get the automotive financing that you need. Online specialty lenders have looser lending guidelines than those mentioned above. Frequently, borrowers can have a credit score that is sub-559, a DTI that exceeds 40 percent, and a lower monthly gross income. That said, many online lenders only finance dealer purchases, so more research may be required.