Can You Get a Car Loan for a Private Sale?

Private sale car finance in plain English

Buying a car from a private seller can be cheaper than from a dealership, but the finance route is different. The key shift is this: for private purchases in the UK, you generally use a personal loan rather than dealer-arranged finance like PCP or HP. With a personal loan, the money lands in your account and you own the car from day one, giving you freedom to shop widely and negotiate firmly.

Understanding APR is not just about percentages - it is about what you pay in real terms. Personal loans for private car purchases typically come with fixed monthly repayments over one to seven years. Rates depend on your credit profile, loan amount, and term. Strong credit can unlock competitive APRs, while weaker credit will push costs higher. Because the loan is unsecured, there is no lender title on the car, which simplifies a private sale and makes transferring ownership straightforward.

There are legal and practical checks to get right. If the seller still has finance on the vehicle, they must settle it before you buy. Most UK buyers will walk away from a car showing outstanding HP or PCP. You should verify clearance directly with the lender and via an HPI-style check. It is illegal to sell a car with undisclosed finance, and leases such as PCH cannot be sold at all.

Recent headlines matter too. The Supreme Court’s 2025 ruling on historic motor finance commissions and the FCA’s redress scheme expected in 2026 could result in refunds for some past PCP or HP customers. That money may help buyers fund new purchases in the private market, but it does not impact how you finance a private sale today.

Bottom line: a well-priced private sale plus a well-chosen personal loan can be a cost-effective route to car ownership in the UK.

Who benefits most from this route

If you are comparing like-for-like cars and finding private listings a few thousand pounds below franchised dealer prices, a personal loan can close the gap without tying you to dealership processes. It suits buyers who want immediate ownership, clear monthly budgeting, and the ability to choose any seller. It is also helpful if you value speed - many UK lenders offer same-day decisions and fast pay-out once approved.

If you are a seller, understanding settlement and equity is crucial. Clearing existing HP or PCP first usually increases buyer confidence and widens your audience. Where you have equity after settlement, you can price competitively and still achieve a solid return.

Your finance choices at a glance

1. Unsecured personal loan from a UK bank or lender - own the car immediately, fixed terms 1-7 years.

2. Secured loan or homeowner loan - larger amounts, property used as security, consider risks carefully.

3. Savings or part-cash top-up - reduce borrowing and interest costs.

4. Credit union loan - community-focused lenders, competitive APRs for members.

5. 0% or low-rate credit card for a small shortfall - only if the seller accepts and you can clear quickly.

Quick tip: Use soft-search eligibility tools to check likely APRs without harming your credit score.

What it costs and what it means for you

Can you qualify right now?

Lenders assess income, outgoings, credit history, and stability. A strong credit file, steady employment, and a sensible loan-to-income ratio help secure better APRs. If your score is middling, you may still be approved, but at a higher rate or shorter term. Affordability is central in the UK market, so expect checks against your monthly commitments and open credit lines.

Unlike PCP or HP, a personal loan does not tie the agreement to the car or the seller, which makes private purchases simpler once your finance is in place. Still, you must ensure the vehicle is free of finance before handing over any money. Ask the seller to obtain a current settlement figure if they are on HP or PCP, and request written confirmation from the lender once cleared. If the car was bought with a personal loan, title is not held by the lender and normal sale rules apply.

Kandoo works with a panel of UK lenders and uses soft-search eligibility tools where possible, helping you explore competitive personal loan options without harming your credit score. That means you can compare likely rates quickly and proceed with confidence.

From search to keys in hand: the steps

1. Check loan eligibility with a soft search first.

2. Compare APRs, terms, and total repayable amount.

3. Get a provisional budget and shortlist cars.

4. Run HPI checks and review service history.

5. Inspect and test drive, or book an independent check.

6. Confirm any seller finance is fully settled.

7. Finalise your loan and receive the funds.

8. Pay the seller, complete V5C transfer, arrange insurance.

Next steps: line up insurance start date and road tax before collection.

Upsides and trade-offs

Read this before you part with any cash

Do not skip verification. Ask the seller directly whether the car has outstanding finance and verify with a paid HPI-style report. If finance exists, request a current settlement statement and a clearance letter after payment. Never transfer funds until you are satisfied the title is clean. Leased vehicles such as PCH cannot be sold privately at all.

Budget holistically. Factor in insurance groups, VED, tyres, servicing, and likely repairs. A pre-purchase inspection can pay for itself by revealing hidden issues or strengthening your negotiation stance. For the loan, look past headline APR to the total amount repayable and any early settlement terms. If you expect a windfall or a commission refund from historic dealer finance, consider choosing a loan with low or no exit fees so you can repay early.

Alternatives if a personal loan does not fit

1. Use savings for all or part of the price to cut interest.

2. Consider a cheaper model or older year to reduce borrowing.

3. Explore credit union loans if you qualify for membership.

4. Buy from a dealer using PCP or HP if you prefer built-in protections.

5. Delay purchase to improve credit and qualify for a lower APR.

Common questions, clear answers

Q: Can I get dealer finance like PCP or HP for a private sale? A: No. PCP and HP are dealer-arranged products. For a private purchase you typically use a personal loan or savings.

Q: What APR should I expect on a personal loan? A: Rates vary widely by credit profile, loan size, and term. Many borrowers see single to mid-teen percentages. Use eligibility checks to gauge your likely rate.

Q: How do I make sure the car is not on finance? A: Order an HPI-style report, ask the seller for a settlement statement if applicable, and request written clearance from the lender before paying.

Q: Is selling a car with undisclosed finance illegal? A: Yes. Failing to disclose or settle finance before sale can amount to fraud. Buyers should always verify title.

Q: Do recent court rulings affect private sales? A: The 2025 Supreme Court ruling concerns historic dealer finance commissions. Any FCA redress in 2026 may boost some buyers’ budgets but does not change private sale steps.

Q: Can I repay my loan early? A: Often yes. Check for partial or full early settlement terms and any fees. Reducing the term typically cuts total interest.

How Kandoo helps you buy better

Kandoo is a UK-based retail finance broker that helps you compare personal loan options for private car purchases. We use soft-search tools where possible, so you can check eligibility and likely rates without impacting your credit score. Apply online in minutes, get fast decisions, and move quickly on the right car.

Important information

This article provides general guidance, not personal advice. Eligibility and rates depend on your circumstances and credit status. Always check the car’s history and finance status before purchase. Terms and product availability may change. If unsure, consider independent financial advice.