Used car Financing, private party

[rancid240]

Wondering if anyone whos done it before will sum up the experience, I am thinking about buying a car for ~13k, but KBB is more like 7k (stock, hehe). Bank has approved me for the 7k and I will pay the 6k in cash...few questions...

Does the CU or bank inspect the car? SO far they have asked me for a VIN and sellers info only so far.

Title is still regged under the last owners name, but is signed over...Im thinking thats going to pose a problem with the bank...any thoughts.

[mellojoe]

Ok. I'm an ex-banker. I was a manager at a branch location for 3 and a half years.

This is what it boils down to: Collateral + Credit Score

Collateral:
This is what you are borrowing money against. The thing. The car, in this case. If you are looking at financing a car that is over 5 years old, good luck. Most banks will not finance a vehicle over 5 years old due to instability in guaranteeing its value. Also, even a $7,000 loan could be a 4-year payment plan (roughly $175 a month, give or take) and then the bank is holding the title of a 10-year old (or older!) car. They definately don't want to be in a position to have to rely on the value of a vehicle that is 10 years old.

Credit Score:
You want to make sure you have good credit. This means three separate sources for a minimum of 1 year each. This can be something simple as a BestBuy credit card, a Wal-Mart credit card, a car loan, sometimes even utility payments can show up on your credit report. You want to have a score that is over 650. Over 700 is better. The better your credit score, the more willing the financial institute is willing to gamble on you.

Every loan that I ever did, I looked at the collateral. For mortgages they call it an "appraisal". You've probably heard it. Since they are investing their money, they want to make sure they are getting what they are paying for. You have to understand that from the bank's point of view: If something were to happen to you (ie. You were killed or you moved to Cuba), how are they going to recover their money? They would have to turn around and auction off the car to the highest bidder that is willing to buy a particular car. Niche vehicles are hard to turn around and sell again, so its hard to commit financially to purchase them. They don't care that some 17-year-old kid wants a DORIFTO! JDM! toy. They want to know that the fair market value of the car will always be sufficient for them to recover the losses.

Sure, its just a $7000 loan. The bank probably has MILLIONS out on loan. True. But the Fair Standards of Lending (not the exact name, but you get the idea) is a Federal regulation (THE FEDS!) that dictates that all loans have to abide by the same rules. The banks can refuse service to anyone at any time, but they'd have to be able to prove they did it for no reason and NOT for discrimination. So, the only way banks can prove they are not discriminating is to have one set of rules for everyone. One set. This means that they will look at your "little" $7,000 loan in the same way they do a $70,000 loan. Sure, there is more wiggle room in a smaller loan, but not by much.

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alot of times your credit card company will give you a special auto loan...

[exitspeed]

My question is, why would you want to buy a car for $13k when it's worth $7k?

There has to be something better you can find.

That was just my first thought.

[ManoNegra]

The car is most likely modded hence the 13k but KBB value for the car stock is 7k so that's what the bank is willing to lend. Correct me if I'm wrong rancid240.

[rancid240]

The car is most likely modded hence the 13k but KBB value for the car stock is 7k so that's what the bank is willing to lend. Correct me if I'm wrong rancid240.


True that...

I think the biggest hurdle now is that the title is in limbo between owners.

[exitspeed]

The car is most likely modded hence the 13k but KBB value for the car stock is 7k so that's what the bank is willing to lend. Correct me if I'm wrong rancid240.


I would never want to finance a car in that situation...Cars aren't good investments anyway, but then your instantly upside down by.

I went through my car financing whoa's when I was younger and won't put myself in these types of positions again. It's kind hard to see the long term results sometime's when you want something so bad..

But good luck.

[mellojoe]

My advice:
NEVER FINANCE A HOBBY!

Its only leads to major problems later down the road...

[chuy]

Mine was worth 5k and I needed to come up with another 3k I had the money but I took out a signature loan for the other 3.