Discover How Old You Have to Be to Get a Car Loan

For many teenagers, getting a driver's license is a rite of passage. But even with a driver's license in hand, it can be difficult for young drivers to get a car loan.

In most cases, you must be at least 18 years old to borrow money from a lender. There are ways for teenagers to finance a vehicle, but it usually requires a parent or guardian to take out a loan and put the vehicle in their name.

How Old Do You Have to Be to Buy a Car?

In almost every state, you have to be at least 18 years old to get an auto loan. Because a loan is a legally binding contract, auto lenders can't hold minors legally responsible for the terms of a contract until they reach the age of majority, which is 18 years old in nearly every state.

Because of this statute, few lenders will issue a car loan to a minor. Those few that do will likely require a co-signer, like a parent or a guardian who is over 18. Many banks also want borrowers to have an established credit history, which most teens don't have unless a parent adds them as an authorized user on one of their accounts.

Is There an Age Requirement to Buy a Car with Cash?

Because most drivers under 18 can't get an auto loan, the only other alternative is to purchase a car in cash. However, young drivers who want to buy a car with cash might run into some obstacles.

If a minor wants to pay cash for a vehicle, most states still won't allow them to have a car titled in their name. Texas is one of the only exceptions. As a result, an adult may have to register the vehicle in their name.

Check with your state's motor vehicle department to learn about the specific laws that apply to a minor purchasing a vehicle. Even if you are able to bypass your state's titling laws and pay cash, you still need car insurance to drive legally. Thus, adult assistance is required either way.

Can a Teen Buy Car Insurance?

Car insurance is a legal requirement in almost every state. Regardless of your age, all vehicles must be insured. However, an insurance policy is another type of legal contract. That means a driver under 18 may not be able to purchase their own coverage from an insurance company.

Of course, parents can add their children to their car insurance policy, which is the easiest way for minors to get coverage. If the child has their own car, a parent can also add the vehicle to their existing insurance policy.