Written by Buying a used car from a private sale is a great way to save money on your vehicle purchase and car loan as a result. With competitive rates and flexible terms available whether you’re looking to buy for yourself or your business, Savvy can help you compare a range of options to narrow down private sale car loan. We’re partnered with a wide range of over 40 lenders that cater to your needs. Get a free, no-obligation quote with us today!
Why compare car loans with Savvy?
40+ Car Loan Lenders
Competitive Interest Rates
100% Online
4.9 Star Customer Service
Helping Australians since 2010
Doesn't impact your credit score
Can I get a loan for a car purchased through a private sale?
Yes – you can finance a car bought from a private seller, provided the vehicle satisfies your lender’s requirements. Whether you’re buying privately or through a dealership, the lender's income and overall profile requirements for you are the same.
However, a private sale car loan may require you to conduct more checks and sign a few more documents when it comes to finalising the deal. This is so the lender can ensure the car qualifies for your loan.
What questions should I ask before buying a car from a private seller?
The key questions to ask your car’s seller before you sign on the dotted line include:
- Why are you selling the car?
- Does it have any existing damage or has it been repaired?
- Can I check the car’s service and repair paperwork?
- Has the car been written off or stolen?
- How many owners has the car had?
- Is there any finance owing?
- Is the car still under warranty?
Some of this information can be independently verified using the following sources, allowing you to determine whether the current owner is telling the truth:
- PPSR check: checking the Personal Property Securities Register (PPSR) will tell you whether the car you wish to buy is still under finance and if it’s been written off or stolen in the past. This can be done for $2.
- Car history report: this can include a PPSR check, as well as provide information on prior sales listings, car safety and an estimate of its value. There are several private companies who offer this service for a fee.
- State/territory registration check: you can also use your state or territory government lookup to see whether the car is registered.
What to look for when inspecting a car from a private seller
It’s crucial to inspect the vehicle yourself, as well as have an independent mechanic check it out, before agreeing to purchase it. This can help you avoid buying a lemon. Here’s what you should keep an eye out for:
Should I book an inspection with a mechanic?
Yes – having an independent mechanic examine a car you’re looking to buy is a great way to pick up on potential issues you might’ve missed. Professionals know what they’re doing, and as good a DIY check as you might’ve done, it’s virtually impossible to find everything. This is a paid service, but it can bring peace of mind and potentially save money down the track by helping you avoid dodgy cars.
What factors impact the value of used cars?
There are a number of factors that determine a car's value. These can include:
- Age and distance driven: as a general rule, the older the car and the more kilometres driven, the lower its value will be. High-usage cars typically have more wear and tear.
- Make and model: some car brands and models are known for their reliability, performance and popularity, making them more sought after in the used car market.
- Condition of the vehicle: cars with minimal wear and tear are likely to fetch a higher price compared to those with visible damage or mechanical issues.
- Repair history: even if a car is in good working condition now, a history of significant repairs can negatively impact its value.
- Service history: a car that has been regularly serviced is more likely to attract a greater price than one that hasn’t, as it offers greater reassurance of the car's reliability and condition.
- Market demand and seasonality: high demand for specific car models can drive up their value, particularly if they’re in short supply. Additionally, factors like the time of year can affect car prices.
- Upgrades and features: certain upgrades and additional features, including safety features, can increase a car's value as they are more appealing to buyers.
- Location: car values can vary depending on your location within Australia. Factors like local demand and availability in your state, city or town can influence car prices.
How do I know how much a car is worth?
To help you estimate the value of a car, many websites and car valuation platforms offer free online tools that allow you to enter your car's details, such as make, model, year, mileage and condition. These tools use algorithms and market data to provide you with an estimated value. Keep in mind, however, that while these tools can give you a rough idea, they may not consider all specific factors that could affect your car's worth.
What can I do if the car is still under finance with the private seller?
It’s still possible to get a car loan for a vehicle which has outstanding finance. There are two main options for what to do in this situation:
Have the loan paid out first
Your vendor can pay out the loan first if they have enough funds, which will save both of you time and effort in the handover process. However, if your vendor isn’t in a position to pay out the loan before the sale, they’ll need to provide a payout letter.
Receive a payout letter
A payout letter should include details such as the outstanding balance on the loan, its due date and the bank details of the seller’s lender.
If your vendor supplies you with this letter, you can pass it onto your lender, who can pay the portion of the loan needed to pay off the outstanding debt directly to their lender. Any amount above this will be paid to your vendor.
However, if your vendor’s loan amount is greater than the agreed purchase price of the vehicle, they’re responsible for paying out the difference to their lender. This isn’t your responsibility unless agreed upon as part of the sale.
How do I sell a car privately while it’s still under finance?
If you want to sell your car but haven't finished paying off your loan, these are the steps you can take:
- Speak with your lender: discussing the situation with your lender will help you determine whether you’ll have to pay off the loan in full before selling the car or if you’re able to have the buyer pay your lender instead. They’ll provide you with a payout figure, which is the amount required to pay off your debt, inclusive of interest and potential fees.
- Assess the car's value: research the current market value of your car. You can use online platforms, car valuation tools or seek guidance from professionals. Understanding your car's worth will help you set a reasonable selling price which takes the outstanding finance into account and helps ensure you receive a fair deal.
- Communicate with the buyer: it’s essential to be transparent with potential buyers about the loan. Inform them of the situation and what your intention is with the remaining debt, bearing in mind they’ll be able to check if your car is under finance.
- Complete the sale: once you have a buyer and the agreed payment, work with them to arrange the sale. This will involve either you paying this amount out to the lender or arranging for the seller to transfer the funds to them directly.
- Transfer ownership of the car: after the outstanding finance is settled, you can proceed with transferring ownership to the buyer. You’ll need to complete a Notice of Disposal form and any other required documentation through the relevant state or territory authority. This ensures the change of ownership is properly recorded.
How much will my private sale car loan cost?
There are several variables which can impact the cost of your car loan, including:
- Interest rates: perhaps the most important factor in the cost of your loan, lower rates will result in greater savings.
- Fees: establishment, ongoing and early and late payment fees can all add up over your loan.
- Loan term: the longer you choose to take to repay your loan, the more interest you’ll pay.
- Loan amount: interest is calculated based on the outstanding loan amount, so larger sums will attract more interest.
- Early repayments: if you manage to pay off your car loan early, you can save on interest and fees (provided you aren’t charged early payment fees).
- Balloon payment: by attaching a balloon payment to your loan, you can reduce your monthly repayments, but doing so will increase its overall cost.
The following table demonstrates how repayments can vary based on different rates and loan sizes:
| Loan size | 7.00% p.a. | 8.00% p.a. | 9.00% p.a. | 10.00% p.a. |
|---|---|---|---|---|
|
$30,000 |
$594 |
$608 |
$623 |
$637 |
|
$40,000 |
$792 |
$811 |
$830 |
$850 |
|
$50,000 |
$990 |
$1,014 |
$1,038 |
$1,062 |
|
$60,000 |
$1,188 |
$1,217 |
$1,246 |
$1,275 |
|
$70,000 |
$1,386 |
$1,419 |
$1,453 |
$1,487 |
Source: Car Finance with Instant Approval Online – Savvy. Repayments are calculated based on a five-year term and monthly instalments.
What our customers say about their finance experience
Savvy is rated 4.9 for customer satisfaction by 4242 customers.
How to apply for your car loan with Savvy
The pros and cons of traditional car insurance brokers
Because private sellers don’t have margins to stick to or targets to meet, you may find starting prices are lower than used cars sold through dealerships.
For the same reasons, you’ll generally have more wiggle room to negotiate the sale price of the car without having to worry about dealership overheads.
You won’t have to worry about dealing with salespeople looking to seal the deal or include accessories you don’t need; it’s just you and the vendor here.
You can browse online marketplaces for private car listings and reach out to whoever you like from the comfort of your home (before inspecting the vehicle yourself).
Depending on where you live, used cars from dealerships must come with a statutory warranty and may also have cooling off periods, which aren’t available for private sales.
It’s your responsibility to undertake all the checks into the car’s history and current condition yourself, rather than having all the information available for you.
Buying through a dealership means most of the car and loan paperwork can be sorted for you, but this isn’t the case if the sale is between you and a private seller.
