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Can a teen under 18 get a car loan with a co-signer?
Thursday, Sep 20, 2007
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 minor if 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
I hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
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