Can a teen under 18 get a car loan with a co-signer? - The Bills.com Blog

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Can a teen under 18 get a car loan with a co-signer?

Question: Can a teen under 18 get a car loan with a co-signer?

Answer: While the scenario you describe would be legally permissible in most places, I think it is very unlikely that any lender would extend an auto loan to a minor, with or without a cosigner. Contracts with minors are generally voidable, meaning that it is difficult for a lender to enforce a contract signed by a minorif the minor defaults on the loan payments.

Additionally, a teen under 18 would most likely have a low income and consequently a high debt to income ratio, making the loan very risky and unlikely to be approved.

Therefore, it is very unusual for lenders to extend loans to minors. While a cosigner would be liable for the loan if the minor defaulted, most

lenders would not want to take the risk of entering into an agreement with a minor even with that protection. My advice would be to wait until the minor has reached the age of majority in your state; at that point, he may still need a cosigner, but it is much more likely that you will find a lender willing to finance the loan, since the contract will be easier

to enforce in case of default. If you cannot wait for the minor to reach the age of majority, you may want to do what many parents do–buy the vehicle yourself and allow the teenager to use the car as you see fit.

I hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com

Also, make sure to get a free financial health check-up with Bills IQ!

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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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