Do you need a driver's license to buy a car? The short answer is that in most cases you don't, but unless you pay cash, you won't be able to get it on the road.

Driver's License Questions

Because of our knowledge of auto finance here Auto Credit Express, we typically receive more than two hundred questions each month from car buyers, most of them dealing with credit challenges. Here is just one:

"Do you help with trade-ins and using a car as a down payment? I also do not have a license. Is that a problem?"

There are a number of parts to the answer, so let's begin.

To start with, it sounds like this borrower thinks Auto Credit Express is a bank. We aren't. We simply match consumers to dealers in their area that work with a wide range of lenders, so even if this person has less than perfect credit, the finance department will have the experience to understand the situation.

Using a Trade-In as a Down Payment

To answer the first question, most lenders will accept a trade-in as a down payment on a car loan. But there isn't much information here. We don't know if the trade-in is paid off and, if it isn't, we don't know if there is any equity in it.

In other words, if it isn't paid off, is the vehicle worth more than what's owed on the loan? If it's worth less than the loan balance, then this borrower is "upside-down" in the loan. This is called having "negative equity" in their vehicle.

If this person has bad credit, they will typically need to come up with the cash to cover any negative equity, plus even more to cover a down payment.

Do You Need a Driver's License to Buy a Car?

driver's licenseThe second question is a little more complicated.

If you're paying cash for a car, you don't need a driver's license to buy it. You also don't need a driver's license to title it or insure it.

Technically, you also don't need a driver's license to finance a car, as most banks will accept a valid state I.D. You also won't need a license to title it or insure it.

Where you'll run into problems is when you try to register the vehicle. Remember, you can't buy license plates for a car until you register it with your state's department of motor vehicles or secretary of state's office. But in order to do that, you'll need a valid driver's license — and the name on the registration has to match the name on the title.

If you paid cash, you can title it in the name of someone with a valid driver's license and they can register the vehicle. Keep in mind, however, that the vehicle will legally belong to them because their name is on the title. It also means that you can't drive it because you don't have a valid driver's license.

But if you're financing a vehicle, the lender is going to require that your name, and only your name, is on the title. Without a valid driver's license, you won't be able to register the vehicle and, without a registration and license plates, you can't legally drive the car on public roads.

The Bottom Line

If you don't have a valid driver's license, you can buy a car, but you can't drive it on public roads. If you're financing it, not only can't you drive it, you won't even be able to get license plates for it. So unless you're paying cash, we suggest you work out your driver's license issues before applying for a car loan.

If you have a driver's license but credit problems are standing in the way, we want you to know that Auto Credit Express is here to help. We have a nationwide network of car dealerships that are trained in special finance. This means they have the lenders and know-how to help people in all types of credit situations.

Our service is free, fast, and there's no obligation to buy anything. See what we can do for you by filling out our car loan request form today.