The law doesn't stop you from buying or owning a car before you turn 18 years old, but financing a vehicle is a different story.
You Have to Be 18 to Get an Auto Loan
You can't apply for a loan for a car before you turn 18 years old. Getting a loan requires signing a legally-binding contract with a lender. In the US, you're a minor until you're 18, which is the age of majority. Minors can't sign a legal contract, so being 18 is among the most basic auto loan eligibility requirements.
While you have to be 18 to get a loan for a car, it's also in your best interest to wait until you're no longer a minor. Auto lenders qualify borrowers using their credit and income, and younger borrowers can have trouble meeting their standards.
- Credit – If you're under 18, you likely don't have much of a credit history. Lenders look to your credit reports and credit score to examine your ability as a borrower, as well as to determine if you qualify and at what terms. If you have little or no credit history, you'll have a tougher time getting approved and will likely only qualify for a higher interest rate if you are.
- Income – Lenders also base an approval on your ability to repay the loan, and many young drivers don't have the necessary income to qualify. You can expect most special finance lenders to require you to make a minimum of $1,500 to $2,000 a month before taxes. Lenders also look for your income to be steady, so they may require you to have a certain amount of time on the job. These income and employment rules are a tough obstacle for younger borrowers to overcome.
To wrap things up: the law, your credit, and your finances aren't on your side, and you won't be able to get an auto loan before you turn 18.
Tips on How to Get a Car Loan at 18
Even after you turn 18, getting approved for a car loan can still be challenging due to the credit and income qualifications described above. Here are some tips if you're trying to get auto financing:
- Search for First-time Buyer Programs – Many auto lenders offer loans specifically designed for buyers with limited or no credit history. These are good because you won't need a cosigner to qualify, but the interest rate will likely be higher due to your lack of credit. You should ask your local bank or credit union about the possibility of getting financed before applying for a first-time buyer program elsewhere.
- Have a Down Payment Ready – To help your chances of getting approved, you'll need a down payment – the bigger, the better. Putting money down reduces the amount you're asking to borrow, which, naturally, makes a lender more inclined to work with you.
- Get a Cosigner – Having a parent, relative, guardian, or friend with good credit cosign on the loan can improve your chances of qualifying, and may even help you get a better interest rate. Be aware that the cosigner is legally obligated to pay back the loan in the event you don't, and their credit can be negatively impacted if the loan isn't paid as agreed.
The Bottom Line
You have to be 18 to get a loan for a car in the US. Even after you legally become an adult, qualifying for an auto loan can be hard due to lender credit, income, and employment qualifications. However, your chances of getting approved increase when you apply with lenders that are capable of handling unique credit situations.
At Auto Credit Express, we work with dealerships across the country that specialize in helping people with no credit, bad credit, and other complicated credit situations. We'll work to set you up with a dealer in your area if you take a quick moment to submit our free and secure car loan request form.