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A person-to-person car loan is when you buy your new car from a private party, not a dealership. These types of car loans have many similarities to financing for purchases from dealerships. However, there are also many differences.


Interest rates
Person-to-person car loans typically have higher interest rates than new and used car loans purchased at dealerships. In fact, private party car loans can be up to two points higher than new car loans and up to one point higher for used cars bought from a dealer. The interest rate you will receive will depend on your credit history and credit ratings. Check out the recent auto loan rates we offer for all types of car loans.

**We suggest you get a copy of your credit report before applying for any type of loan. It is important to make sure your information is accurate and up-to-date to ensure that you receive the best rates and terms for your financing.

Loan terms
Available loan terms for private party purchases are going to be less than new cars. New car loans are generally available for up to 72 months. Financing for used car dealership purchases is usually 48 months. The typical maximum loan term for private party loans is 48 months. However, if you have good credit, it is possible to finance your vehicle for a longer term.

**It is important to know that no matter what kind of new or used car you buy, from any source, you should finance your vehicle for as short as possible. The longer your auto loan term is, the more interest you will end up paying. Shorter loan terms will also reduce the chance of becoming upside-down on your car loan. Learn more on choosing the right car loan.

Down payments
A down payment is not required when you apply for a private party car loan with Star Loan Services. However, it is a good idea to try and put down at least 20% to avoid becoming upside down on your loan.

Taxes, title and registration
When buying a car from a dealer, these items are combined into the final loan amount. However, you can not combine these fees into your loan when applying for a person-to-person loan. These fees will be paid for out of pocket. 

Name on title
Your name will be placed on the title of your new car the instant it is purchased from the dealer. However, it can take up to two weeks for your name to be placed on the title of a vehicle involved in a private party purchase. Why? It can take the seller's lender time to complete the payoff process.

In conclusion, buying a car from a private seller can be beneficial. It may be possible to obtain a better sale price, especially when buying from a friend or relative. It is important to understand how private party auto loans work. If you have any questions, please contact us.



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