Not every bank or broker will be happy in providing secured funding for private sale vehicles as there is always a risk of fraudulent activity and risk to the lender, however if you follow a few simple steps, you can safeguard any potential risks in purchasing and arranging private sale car loans.
When buying through a licenced motor dealer, they have to adhere to Government conditions in order to operate and remain in business, so must provide some form of guarantee on the vehicle, proof of ownership, ensure no finance commitment is owing and have an operating licence. If there is any fraudulent activity, it is easier for a lender to contact a dealer rather than a private seller.
Unlike an unsecured car loan where the lender advances the funds directly to you, if you are using a secured car loan to purchase a private sale vehicle, lenders will ask for additional information from the seller so as to determine ownership, condition of the vehicle, and where to advance the funds upon settlement.
Typical conditions required by lenders for private sale car loans are:
Proof Of Vendors Bank Details
Photos Of The Vehicle
Private Sale Invoice or Purchase Agreement
Roadworthy Report or Safety Inspection
Visual Inspection Report
Payout Letter From Financier
(If the vehicle is under a current finance arrangement)
Proof of Ownership
Both the Driver’s Licence and Registration Papers will ensure proof of ownership and lenders will only advance the funds to the owner, so proof of bank details need to be in the sellers name as well. Obtaining photos and a visual inspection ensures the vehicle is as described and as the lenders will be holding a financial interest over the vehicle, they need to make sure of the correct manufactured year and model.
If the vehicle being purchased is an older model car or has higher klms, some lenders will request an independent mechanical inspection to ensure there are no major mechanical issues that may arise after purchase.
Your broker will also provide supporting documentation to the lender by conducting a Personal Property Security Register or PPSR search to ensure the vehicle is not an economic repairable write off, under current financial arrangement or stolen. The PPSR report also shows the correct vehicle identifiers.
Other factors to allow for when purchasing a private sale car are that there is no guarantee or warranty should a mechanical issue arise after delivery. You cannot simply call the seller and ask them to fix the vehicle. For this fact only, you should organise an independent mechanical inspection through a motoring body such as RAC or NRMA to ensure the vehicle is in sound mechanical condition.
On Road Costs
On road costs are not included in the sale price and need to be taken into consideration. Depending on the price of the vehicle and what state you live in, you need to account for Government Stamp Duty costs of anywhere between 3%-6.5%.
This may sound like a lot of work, but with a few simple checks and processes this can ensure not only the lender has protection, but also you as a buyer. Should you have a pro active broker, they will liaise with the seller and organise the necessary checks for you making the private sale car loan process much easier.
iCREDIT can help you find, compare and choose a private sale car loan that’s suitable to your needs and affordability criteria. Our professional finance brokers ensure you are adequately protected throughout the private sale purchase.
Contact us on 1300 350 118 or email@example.com to discuss your private sale car loan comparison needs.
This article contains information on private sale car loans.
This information provided is a guide only. It should not be treated as financial advice and does not take into account your personal circumstances, financial needs or loan requirements. If you have any specific questions about financial matters or government legislation, you should consult an appropriately qualified professional or government department. iCREDIT endevours to ensure the information is accurate at time of publication, however cannot guarantee the ongoing accuracy this information.