Borrowers may technically qualify for a car loan but chances are they will run into problems after that if their driver's license is expired.

Does a Drivers License Matter?

Getting a Car Loan with an Expired Drivers License

Here at Auto Credit Express we recently received a question from a consumer that went like this: "If my license is expired can I still get a loan?"

The short answer is that consumers with an expired driver's license may qualify for a loan, but chances are that without a current valid license the lender won't fund the contract so the offer of credit will be void.

Here's the rest of the story.

Lender Rules and Your License

The most obvious answer to the question is, "If your license is expired, why don't you renew it before you apply for a car loan?" Renewing it would solve the problem, unless it cannot be renewed – and if it can't be renewed that opens up a whole new can of worms, so we'll just deal with the problem at hand.

Lenders, even those who deal with consumers with bad credit, don't need a driver's license to approve a car loan. But it's what happens after that that can nullify the approval.

That's because all lenders require that borrowers carry full coverage auto insurance on any vehicle secured by a loan. Regardless of credit, you're going to need some form of car insurance. And that coverage also has to be in the borrower's name.

In order to purchase a vehicle policy, however, the borrower has to furnish the insurance company with a valid driver's license.

But it doesn't stop there. Here in Michigan, as in most other states, in order to legally transfer ownership of a vehicle (to obtain a title to it) as well as register it to obtain license plates, the Secretary of State also requires the new owner to furnish proof of insurance.

The Bottom Line

Despite the fact that a lender can approve a car loan even if the applicant has an expired license, the loan cannot be funded and the title to the vehicle cannot be transferred without a valid insurance policy in the borrower's name - something that will not happen if the borrower has an expired driver's license.

Something else that's important to remember: at Auto Credit Express we match applicants that have experienced car credit problems with dealers that can give them their best chances at car loan approvals.

So if you're ready to reestablish your auto credit, you can begin now by filling out our online auto loan application.