If you are a teenager and have just received your driver’s license or are about to get it, you may be wondering how old do you have to be to get a loan for a car? First of all, if you’ve never had an auto loan or have limited credit, you will be classified as a first time buyer. First time buyers may have a difficult time finding financing because they don’t yet have a proven track record that the banks can go by. Sure you really want a car and promise to make your payments if they would just pony up about $15,000 for you to give the car dealership, you’d be set, right?
If you are under eighteen though, you have a slightly larger problem than a potential zero credit score or first time buyer branding, contracts written with a minor are not valid. This means that you will have a pretty hard time convincing the bank to even consider giving you a car loan. Your best bet in this case is to ask someone who is over eighteen, like mom or dad to sign on the loan as well, if they have good credit, the bank will consider the loan much more seriously. This much more qualified applicant is called a co-signer. If you still live at home with your parents, this may be the best approach anyway. The bank may consider your parents as their ally when it comes time to get their money every month.
If you have never had an auto loan before, please don’t go crazy on your car expectations. When banks are considering your payment ability they will usually take 10% to 18% of your gross month income as a maximum monthly car payment; this means that if you make a thousand dollars a month you can’t afford a five hundred dollar car payment. Think about insurance, gas, maintenance, and repairs. These things add up.
