Can You Finance a Car from a Private Seller?

When you buy your car via private sale, you may benefit from more affordable overall price points. However, the financing process for private sale is more complicated. 

Plus, when you access car finance through a dealership rather than an individual seller, you’ll gain access to a range of financing agreements offered either by the dealership itself, car finance companies or brokers like My Car Credit. 

This guide will review everything you need to know when it comes to car finance for a private sale. We’ll cover the risks of financing a car from a private seller, helping you find a better, safer route to car ownership.

What is private car finance?

Private car finance allows you to borrow money to buy a car from an individual private seller rather than a dealership.

With private car finance, the lender pays the seller directly. As the car’s purchaser, you’ll then repay the lender in installments. 

Typically, private car finance agreements require more paperwork and background checks than non-private car finance. These checks can include confirming the vehicle’s mileage and checking its V5C, as well as ID verification and a vehicle history check (HPI). The checks are carried out to confirm that the vehicle is legally available for sale and doesn’t have any outstanding debt still attached to it.

Certain lenders do offer ways of financing a car from a private seller. However, not all finance providers offer this option. You may therefore need to arrange alternative forms of finance – such as a personal loan – if you’re looking for private car finance.

Be aware that when you’re buying a car in a private sale, you won’t benefit from the same level of cover or protection offered through other car finance providers, including dealerships and brokers like My Car Credit. 

Dealerships can also offer guarantees or warranties as part of their car finance offerings, which you won’t receive via private sale car finance.

At My Car Credit, we only work with a network of trusted dealers. That ensures our car finance options are secure, supported and flexible – especially compared to loans you’ll find for private vehicle sale.

Is it possible to finance a car from a private seller?

Some car finance lenders offer private sale car finance. 

However, any company providing a car loan for a private seller will want to conduct a thorough check of the vehicle to confirm that it’s entirely legal for sale. In other words, you’ll face more restrictions for private sale car finance compared to car finance secured via a dealership or other financial institutions.

The types of restrictions you can face when looking for private sale car finance include:

• Stricter checks on the vehicle itself, including of its mileage and the V5C logbook
• More thorough HPI inspections – which you might need to arrange yourself
• Less buyer protection compared to non-private sale car finance 

Many car finance brokers – including My Car Credit – do not currently offer finance for private sellers. Here’s why… 

Why most finance providers avoid private seller car loans

Many auto finance institutions avoid private sale car finance for a number of reasons. 

The condition of the vehicle for sale may be unclear, with limited comeback if there’s a problem. 

Unlike dealerships, private sellers also offer no guarantees or warranties. Plus, because the seller process isn’t FCA-regulated, there’s less buyer protection and payment security, meaning you’re at a higher risk of fraud. 

Lenders also take on more risk when they finance a car loan for a private seller. As the vehicle’s buyer, this can lead to higher interest rates for you, or a higher risk of eligibility refusal in the first instance.

Can you privately sell a car on finance?

You cannot legally sell a car if it has outstanding finance on it. You don’t technically own the vehicle until the final finance repayment has been made – the lender is still its legal owner. 

As such, if you sell the car without clearing the finance and any outstanding fees in full, selling it privately is illegal and could even lead to repossession. 

If you have plans to privately sell your financed car, contact your finance provider. They should be able to offer you a settlement figure – also known as an early exit fee – which is the amount you can pay to end your finance agreement early.

What happens if I sell a car with outstanding finance?

If you privately sell a car with outstanding finance on it without telling your finance provider, you’ll face consequences.

You may face legal consequences for misrepresenting the car’s ownership. The vehicle’s new buyer also risks losing the car if the lender reclaims it.

There are ways to return a financed car. That said, you should always settle the finance in full before selling it on, or use a dealership to ensure you trade it in legally.

A better alternative: finance a used car from a trusted dealership

With My Car Credit, you can benefit from securing your next nearly-new or used car and your car finance in one go.

Our one-stop shop of pre-approved, quality used vehicles will grant you access to great deals on nearly-new vehicles from trusted dealerships.

With an extensive network of vetted partners across the UK, we’ll give you access to competitively priced used vehicles. That way, you enjoy greater protection and warranties, and will benefit from regulated support throughout the process.

Plus, with car finance from My Car Credit, you’ll be offered a no-obligation quote that’s tailored to you. We work with the UK’s largest panel of lenders, and won’t use pushy sales tactics or confuse you with hidden fees. 

We’ll also offer you soft search pre-approval, meaning it won’t impact your overall credit score.

The benefits of dealer-based car finance with My Car Credit

Compared to a car loan for a private seller, you can expect to benefit from our car finance in the following ways:

• Safer transactions – With regulated sellers, you benefit from legal protections
• Wider choice of lenders – We’ve got the broadest lender panel of any UK broker, meaning you face a better chance of approval
• Expert support – We handle all paperwork and negotiations, offering professional support and advice throughout the application process
• Faster decisions – Our application process is all online, so you get results quickly
• Peace of mind – Car finance from My Car Credit means you benefit from warranties, MOT checks and return options

How our online car finance process works

Step 1: Apply Online

• Complete our online application form in mere minutes, outlining your circumstances and the type of agreement you’d benefit from
• An initial soft search means no impact on your credit score

Step 2: Get a Personalised Offer

• As part of the UK’s largest motor finance broker, we’ll find the best deal for your credit profile

Step 3: Choose a Car from Our Network

• Use our My Car Search to find used cars from trusted, approved UK dealers

Step 4: Drive Away Confidently

• Secure, simple, stress-free – take to the road in ease and style 

Private seller car finance FAQs

Can you finance a car from a private seller​?

Some car finance providers do offer private sale car finance. In order to ensure the total legality of the sale, remember that you’ll face more background and vehicle checks if you opt for a car loan for a private seller.

Why is private car finance riskier?

Private car finance is riskier because you won’t benefit from the same level of buyer protection or payment security offered in dealer- or broker-based car finance. Plus, with car finance from a provider like My Car Credit, you can take advantage of other advantages like guarantees or warranties, too.

Can I still get finance for a cheap used car?

Many car finance providers offer car finance for nearly-new and used cars. At My Car Credit, we offer fast and fair used car finance for drivers with all credit profiles and vehicles at different price points.

What if I have bad credit?

Poor credit car finance is offered by many car finance providers, including My Car Credit. We’ll consider all circumstances, combining a wide panel of trusted lenders with a sensible approach to help you find the most suitable agreement for your needs.

What’s the alternative to buying privately?

You can secure your next car from trusted dealerships or vetted resources like our My Car Search. You’ll benefit from expert support and access greater buyer protection, warranties, and guarantees compared to buying privately. 

Ready to finance your next car the smart way?

Securing a car loan for a private seller is possible with some car finance providers. At My Car Credit, we don’t support private sale car finance due to the associated risks and lack of buyer protection.

Dealer-based car finance with us is a safer, simpler and more supported option. Use our car finance calculator to discover the kind of agreements you could benefit from, or kickstart your application today by filling in our online form.