Private sales are cheaper to buy and slower to finance. What lenders check, and what holds a settlement up.
View all PostsBuying privately usually saves you money on the car and costs you time on the finance. Lenders are not against private sales. They just have more to check, because there is no dealer standing behind the transaction.
The short answer. Yes, lenders fund private sales every day. Expect three extra steps: a PPSR check on the car, proof the seller is the registered owner, and payment made straight to the seller rather than to you. Get approved before you hand over any money.
None of that is a reason to avoid a private sale. It is a reason to know the order things happen in. Most private deals that fall over do not fall over because the lender said no. They fall over because a buyer committed to a seller before the lender had finished looking at the car, and then had to go back and unwind it.
The saving is real. A private seller is not carrying the cost of a yard, a detailer, a warranty provider and a sales team, so the same car is usually cheaper on the private market than it is on a dealer's floor.
What you give up is the safety net. Buying from a licensed dealer in Australia comes with consumer guarantees and, depending on the state and the age of the car, a statutory warranty period. A private sale generally comes with none of that. The car is sold as it sits, and if the gearbox lets go on the way home, that is your gearbox. That is the trade, and it is why an independent inspection before you commit is money well spent rather than an optional extra.
Checking for finance owing is the first thing to do on any private sale car, and the lender will check it too before it pays the seller. Before a cent moves, the lender runs a PPSR check to see whether the car is still security for somebody else's loan. If there is money owing on it, that debt generally has to be paid out at settlement. A written off or stolen record stops the deal dead.
The Personal Property Securities Register is the national record of security interests over things that are not land. Run a car's VIN through it and you get back whether a financier has registered an interest in that vehicle, and whether it appears on the written off or stolen vehicle records.
That is genuinely important, because in Australia the finance follows the car, not the seller. Buy a car with money still owing on it and the financier can, in the wrong circumstances, come and collect it from your driveway. The PPSR certificate is what protects you from that.
What it will not tell you is anything about the car itself. It says nothing about the condition of the engine, whether the odometer is honest, whether it has been repaired after a serious accident that was never written off, or whether the service history is real. A clear PPSR result and a blown head gasket can sit comfortably in the same car.
Names on the registration, the ID and the bank account all need to match. Lenders pay the seller directly rather than handing you the cash, which protects you as much as it protects them.
Mismatches are common and most of them are innocent. A car registered to a spouse. A car being sold on behalf of a parent who has moved into care. A vehicle held in a company or trust name with an individual doing the talking. None of those are fatal, but every one of them needs explaining and documenting before settlement, and each one adds a day or two. Raise it early rather than on the afternoon the funds are meant to move.
Be firm about where the money goes. If a seller asks for payment into an account in a different name, or asks for part of the price in cash on the side, stop. That is the point at which a private sale stops being a bargain and starts being a problem.
Most lenders cap the age of the car at the END of the loan term, not the start. A twelve year old car on a five year term is being assessed as a seventeen year old car. Some lenders price on condition instead, and that is the difference between funded and declined on a tidy high kilometre tourer.
On a secured loan the lender is lending against the asset, and an older asset is a thinner piece of security. That shows up in three ways: a shorter maximum term, a higher rate, or a requirement for more deposit. On older stock again, some lenders will only look at it unsecured, which costs more but can still get the deal done. It is worth pricing both so you can see what the difference actually is.
Because lender policy is not uniform. One lender sets a hard age limit and applies it without discussion. Another looks at kilometres, service history and condition and makes a call. A third has no appetite for private sales at all and prefers a dealer invoice. Same borrower, same car, three different outcomes. This is exactly why lodging applications one at a time to see who bites is an expensive way to find out.
Once you have formal approval, the lender needs the settlement details rather than the story. That usually means a signed invoice or receipt from the seller with the agreed price on it, the seller's bank account details, the registration papers, and the PPSR result.
If there is finance owing on the car, the seller's financier issues a payout figure that is valid to a particular date. Your lender pays that out first and pays the balance to the seller. The security interest is then discharged from the register, which is what frees the car up to be yours.
Funds move in business hours, and they move once everything has been verified. Settling on a Friday afternoon or over a long weekend is how people end up sitting in a stranger's driveway waiting for a transfer. Give it a working day of room.
The transfer of registration is a separate job from the finance and it is yours to do. Each state and territory runs it differently. Some require a safety or roadworthy certificate to be supplied before a transfer can be processed, others do not, and the form, the fee and the time limit for lodging it vary as well. Check your state or territory transport authority rather than assuming the rules are the same as the last car you bought interstate.
Budget for stamp duty on the transfer. It is calculated on the purchase price or the market value, it is payable by you rather than the seller, and it is not usually included in the amount you have been quoted for the car. It can generally be included in the loan if you ask for it before approval, which is easier than finding it in cash later.
A secured loan normally requires comprehensive insurance for the life of the loan, with the lender noted on the policy. That is not an upsell. If the car is written off and there is no cover, the debt survives the car.
Worth thinking about the gap between what an insurer pays out and what you still owe, particularly in the first couple of years of a longer loan or where you have financed extras alongside the purchase. An insurer pays market value or an agreed value on a total loss, and neither of those is the same figure as your loan balance. Ask what your policy would actually pay before you need to find out.
Money handed to a private seller is hard to get back if the finance does not land. Get the approval in writing, then commit.
It happens, especially on a car with genuine interest in it. If you decide to do it anyway, keep the amount small, get a written receipt that names the car and its VIN, and have it say in plain words that the deposit is refundable if finance is not approved. Understand that a receipt is only as good as the person who signed it, and that chasing a private seller through a tribunal over a deposit is a long way to go for a car you did not end up owning.
The cleaner approach is to get a pre-approval first, then go looking. A pre-approval tells you your ceiling and shortens the gap between handshake and settlement, which is the gap sellers get nervous in.
A private sale is a good way to buy a car and a slow way to fund one. Do the checks in order: inspect the car, run the register, confirm the seller is the owner, get the approval in writing, then move the money. Sorted in that order it is straightforward. Sorted in any other order it is the reason the deal falls over.
Yes. Most lenders fund private sales. The process is tighter than a dealer purchase because the lender has to confirm the seller owns the car and that nothing is owed on it.
The lender does, directly, once everything checks out. Money does not pass through your account, which is also what protects you if something is wrong with the car's history.
A PPSR search shows it. The usual fix is for the payout to clear that debt first, with the balance going to the seller. Paying the seller in full yourself before it is cleared is how buyers lose cars.
Often a day or two once you are approved and the paperwork is in, though it depends on the lender and how quickly the seller supplies their details.
Yes, and it is common. Registration is run by each state and territory, so budget for the transfer and check what your state needs before the car moves.
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