Most people know that in the United States, drivers commonly get their license to operate a motor vehicle at the age of 16. But just because you can drive a car doesn't mean you can legally own one on your own. What you may not know is that persons under the age of 18 aren't able to be bound to a contract, which means ownership will have to wait.
Here's what we know about car buying under 18.
There is no legal minimum age to purchase a vehicle in the U.S., however, you won't be able to legally enter into a contract, finance a vehicle, or register or insure a vehicle until you reach the age of 18. This means that even if you are under 18 and have the money to buy a car yourself, you're going to need the help of a parent or guardian to get it on the road.
There is no minimum age to purchase a car in the U.S. However, everything associated with the financing and legal registration of a vehicle requires you to be at least 18 years old. You may be questioning things right now and asking, "Why is this true if most of the U.S. issues driver's licenses at the age of 16"?
Excellent question. This has to do with the difference between ownership and driving privileges, which is what a 16-year-old is issued.
Ownership privileges and driving privileges are not the same. You receive driving privileges when you pass your tests and are issued a license. At 16, the age most teens become drivers, you're typically issued an intermediate or provisional driver's license. This means you're license comes with restrictions.
These include:
When it comes to buying a vehicle, the privilege of ownership is allowed for persons under the age of 18 in the U.S., but it comes with some caveats. In most cases, unless you're an emancipated minor, you need a parent to cosign with you on the car, and will need a parent or legal guardian to sign the title and insure it. In most states, the title can be transferred to your name after turning 18. Also, remember that even if you own a car, you still need a license to legally operate it.
Some states allow young persons to get a permit well before the age of 18, like Montana and South Dakota, where you can get a learner's permit at 14. Even if a teen does get a learner's permit or a restricted driver's license, it comes with regulations that are enforced by law. These include not being allowed to drive at night, having a limit on the number of allowed passengers, and a zero-tolerance policy on alcohol use.
You can save your money and use your own cash to purchase a vehicle under the age of 18, however, in most cases, you will need a parent or legal guardian to sign the contracts with you, since a minor cannot enter into a binding contract until they're 18. That is, unless you're an emancipated minor.
As an emancipated minor, you have all the legal rights afforded to 18-year-olds, as long as the state you're living in recognizes emancipation. Five states don't have specific legal emancipation practices: New York, Georgia, Mississippi, Massachusetts, and Maryland.
Even though emancipation will give a minor the right to enter into a contract, some dealerships and lenders may still be hesitant to work with them. Be prepared to show your documentation and provide the proof you need to get a vehicle on your own in these cases.
When it comes to financing a vehicle under the age of 18, you will need a parent or legal guardian to help. This means that they will be listed as the responsible party, and the minor can be listed as the driver.
This is the most widely used option when it comes to getting a car for a minor. Since teens don't usually have much or any credit history, the loan is typically based on the adult's creditworthiness. The parent or guardian will cosign the loan and be the legally responsible party if the minor fails to make payments. The loan will typically be in the adult's name, with the minor listed as the driver.
Other options do exist for financing a vehicle as a minor, but they all involve the use of an adult parent or guardian. These methods may include:
Keep in mind that in all the above scenarios that an adult typically has to insure the vehicle, register the vehicle, and hold the title to the vehicle until the minor has turned 18. This varies by state, however, so be sure to check with your local Department of Motor Vehicles or Secretary of State's office to find out the rules where you live.
While a 17-year-old can technically use cash to purchase a vehicle from a private seller, it comes with a lot of risk. This is because in most states, minors under the age of 18 cannot enter into a legally binding contract. This means they can break a contract without much consequence, which is why many sellers won't take on this risk and require an adult to be involved. Additionally, many states require an adult to register and insure the vehicle, which is necessary to legally drive the car.
In certain states, a 16-year-old can register a vehicle in their name; however, purchasing and insurance may still require a parent's signature. Tennessee, Missouri, Texas, New York, Idaho, and Montana all allow 16-year-olds to register a vehicle, however, many of these states require the parent or guardian to be a cosigner on the loan for the minor to register the car.
No matter whose name is on the policy, adding a teen driver to an insurance plan automatically means higher costs. Teenagers are seen as high-risk drivers simply due to their lack of experience compared to other drivers on the road. This leads insurance companies to require higher premiums for teens.
If you're adding a teen to an existing policy, you can expect your premiums to rise, but this is typically the more affordable option. A teenager getting their own new insurance policy usually requires an adult to sign the documents in most states, and it can cost twice as much as adding them to a current policy. Additionally, many insurers won't work solely with a teen, so even if the vehicle is titled in their name, they may not be able to obtain insurance on their own.
There are no restrictions on the type of vehicle a teenager can own, if they're allowed to own a vehicle in that state, and they can afford it, the sky is the limit. However, the same limitations for registration and insurance still exist. It may also be in their best interest not to go overboard, or they could end up paying an arm and a leg for the fees that go with the vehicle.
Senior Automotive Financing Editor
Meghan is expertly versed in automotive special financing and pricing analysis, having published hundreds of articles on Auto Credit Express and its sister sites, CarsDirect, and The Car Connection over the past decade. She began her career as a sports writer for the local newspaper in her hometown nearly 30 years ago, and has enjoyed writing ever since. Read more
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