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Used Car Loans for Independent Dealers – Will a Bank Finance Them?

Many large lenders, Capital One and Bank of America are prime examples, will only lend money on cars that are purchased from franchised dealerships because they feel that the collateral offered by these dealerships is more reliable. Often, large institutions have been plagued by borrowers who secure loans on vehicles that breakdown frequently, causing borrowers to default on their loans. Many of these vehicles came from independent dealerships, forcing the aversion by large institutions.

Many smaller, local banks will offer loans for vehicles from an independent dealer. If not, those dealers would be unable to stay open for business. There are two factors to consider before you apply for an auto loan, though. Your credit score and down payment are items that are of major interest to any bank. Smaller lenders will place even more consideration on those factors because of their inability to shoulder as much loss as a larger institution. Try to have at least twenty percent down on car loans from independent dealers.  You can learn more about financing a used car here.

Should your credit score be somewhat lacking, try a finance company or an online loan-matching service (like us!). There are plenty of lenders willing to work with a low credit score and independent dealers as long as you have a reasonable down payment. You just have to shop around to find them.  Go here to apply online for financing from a dealer or lender in your area.  Many of our lenders do fund loans for vehicles purchased from non-franchised dealers. 

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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