It can be difficult to get car loans for used car auctions, but it is not impossible. Most large, national banks will not offer you a loan for a car auction unless your are a licensed dealer. Many credit unions are the same. So, what are your options?
Auctions are generally, as you know, managed by one company or another. The most well-known are the classic car auctions like Mecum and Barrett-Jackson, though chances are you will be attending an auction put on by a smaller company that deals more in traditional vehicles sold off-lease, by finance companies, etc. In either case, the auction itself often has lenders affiliated with it. These are generally local or regional banks, credit unions, and/or auto finance companies that operate on-site, on the day of auction, as well as beforehand. In most cases, you will need to have secured financing before bidding on the vehicle you want. Check with your auction company to learn more.
Unsecured Personal Loans
Despite the difficulty of getting a loan for a used car auction, you have several options open to you. The first is to apply for a personal loan at a bank or credit union that you have been doing business with. Since personal loans are unsecured, they can be hard to come by unless you have a fairly high credit score. They also carry a higher interest rate than a used car loan and may have a shorter repayment term.
Your second option would be to try an online peer-lending site. There are too many to name and some are for specific purposes only. By spending some time online, you can find the right source for you needs. Prosper and Lending Club are two that have a history of helping people. You should be aware that running an application through any of these websites is going to require your social security number and personal information just as if you were applying for a loan anywhere else. It will also constitute a hard pull of your credit report, thus lowering your credit score temporarily. Disclaimer: we are not affiliated with any peer-funding website.
Online Auto Lenders
Your fourth option is to search online for a specialty lender. These are small finance companies that specialize in non-traditional loans, bad credit car loans, loans for classic cars, etc. These companies negate the additional risks of non-traditional loans by requiring higher interest rates and shorter repayment terms than you may expect or be used to. We can often put you in touch with a lending professional from such a lender when you apply online.
Financing for Classic Car Auctions
We have written this article with your typical dealer auction in mind. However, if you need a car loan for a collector auction, there are definitely options. Possibly your best bet is the company JJ Best Banc & Co, a national company that finances collector cars. This typically works in one of two ways:
- JJ Best is actually present at the auction, allowing you to get an actual “car corral loan”–basically, enabling you to secure financing for a vehicle you want to bid on before it goes to auction.
- If JJ Best is not at the auction, they can provide you with an authorization letter that is accepted by most auction companies.
One final thought: getting a loan for a used car auction is a bit risky if you want a specific vehicle. You may not estimate the final bid price correctly. You will want to carry some extra cash just in case. On the other hand, if you are able to get the vehicle for less than expected, you will want to have a plan for that additional cash. In that instance, you may want to use the cash to cover any immediate repairs needed, then make an extra payment on the loan with any remaining balance.