The Bottom Line :Loans are one of the basic building blocks of the financial economy. By loaning out money with interest, lenders are able to provide funding for economic activity while being compensated for their risk. From small personal loans to billion-dollar corporate debts, lending money is an essential function of the modern economy.

A private party auto loan is a type of loan that you can use to finance the purchase of a car from an individual. Many financial institutions offer these loans, including banks, credit unions, and online lenders.