Can I use a credit union car loan to purchase from a private seller?

April 17, 2022 2:29 PM

I'd like to buy a 2018 Prius prime from a private seller (because it's more affordable and I find most dealers shady). As far as I know most credit unions will only finance cars from a dealership. Is there a way to finance from a private seller? Cheers.
posted by maxexam to Work & Money (11 answers total)

If you can get an unsecured or “personal” loan, you can finance …anything really. However the interest rate will be higher because the car isn’t being used as collateral — the bank is taking a higher risk because they can’t take away the car if you don’t pay.
posted by chesty_a_arthur at 2:40 PM on April 17, 2022 [1 favorite]

Mine allowed this explicitly on the form check's instructions I would supply to either dealer or private seller. I was preapproved before I found my car. The problem we had, however, was that the SELLER'S bank would not take the original form check provided by my credit union and refused to just call my credit union to verify it wasn't fraud (from a well known state credit union; flipping ridiculous customer service). My credit union ended up setting up the loan after I had provided all details about the car and cutting a cashier's check to the seller.
posted by rawralphadawg at 2:46 PM on April 17, 2022 [1 favorite]

This is the first time I have heard the idea that a credit union would only work with a dealer. I recently sold a car to to someone who got a credit union loan, it worked out nicely because we just met at the credit union, the teller handed me a big ol' cashier's check (that i knew was real because it came directly from the bank) that was partly from the loan and partly from the new owner's cash.

If I remember correctly I had to send copies of the registration or other things (I don't totally remember) to the credit union. I then just took it to my credit union and deposited the check. Easy-peasy.
posted by rockindata at 3:00 PM on April 17, 2022 [2 favorites]

I was able to do this with Patelco Credit Union.
posted by latkes at 3:28 PM on April 17, 2022 [1 favorite]

I bought my car from a private seller with a loan from a credit union.
posted by NotLost at 3:29 PM on April 17, 2022 [1 favorite]

Yes; I have done this.
posted by theora55 at 5:27 PM on April 17, 2022 [1 favorite]

I’ve never heard of credit unions refusing to finance private sales. The easiest way is to get pre-approval and then either meet the seller at the credit union to finalize or get a cashier’s check issued and take it back to the seller.

If the purchase price is small enough, you could also do a signature loan and then either withdraw cash or get a cashier’s check issued, and not mess around associating the vehicle with the loan. You’ll pay a higher interest rate for the convenience.
posted by michaelh at 7:12 PM on April 17, 2022

I would say ask your credit union, as it should make no difference to them as they would hold a lien over the title, UNLESS your vehicle's worth was vastly inflated in order to cheat them somehow, but as you are usually also required to hold insurance on it, I doubt they would even care as they are covered by your insurance anyway.
posted by kschang at 10:40 PM on April 17, 2022 [1 favorite]

I think you might have misunderstood your credit union’s policy. I’ve done this at least a couple times over the years (um, one time was over forty years ago) and if they really have such a restriction, it’s time for a different credit union.

As an aside, there has been a proliferation of mega-credit-unions over the last ten or twenty years and my experience is that the larger the CU, the more they resemble Wells Fargo or other generic megabanks. As in they don’t give a rat’s ass about their depositors and refer to their “policy” to defend a ridiculous mistake or lack of service. Small ones—defined by me as ones where the president’s office is in the same building—are way better in my experience.
posted by Gilgamesh's Chauffeur at 6:33 AM on April 18, 2022

Yes, all of my car loans for many years have been through a credit union, although not to buy from a 'guy on a street' but from small used car dealerships -- essentially, I did the following:

• Find out how much the CU preapproves me for;
• after I find the car, call the CU and see how much they'll lend me on it
• Agree on a price with the seller;
• get the purchase paperwork put together from the seller;
• Take this paperwork to the CU, finish the loan application (this likely involves the CU running a Carfax or other reports on the car's validity and title status);
• CU cuts a check for the purchase amount payable to the seller.
• Take the check to the seller, exchaneg for title/completed bill of sale/etc

It's a lot more steps than financing with the car dealership but it can usually be done in a couple hours at most and you've got the benefit of working with a finance organization you trust -- plus the bank is a bit more rigorous at making sure the car is a worthy buy than you showing up with cash to buy a car you've never seen before.
posted by AzraelBrown at 9:21 AM on April 18, 2022

I did this. First I applied for a loan, and when I was accepted and given an amount, I found a private seller. Then we both met at the CR to finalize the deal.
posted by evilDoug at 3:20 PM on April 22, 2022