How Old Do You Have To Be To Buy a Car?
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Summary:
There are a few obstacles to owning a car if you are under the age of 18. Most states require you to be a legal adult to register a car in your name, and insurance companies will not sell policies to minors. This is also true if you are paying for the vehicle in cash, or purchasing it from a private seller. Similarly, it’s also difficult to lease a car if you are under 18. Emancipated minors are some of the few people under the age of 18 that are free to buy, register, and insure a vehicle in their name.
When you first get your driver’s license, there’s nothing like that feeling of freedom and excitement for all the possibilities that lay ahead of you. You dream of going on road trips with your friends, or cruising with the windows down on a summer’s day. Of course, before you can have these experiences, you first need a car to get you there.
Unfortunately, this might not be so simple. Most states require you to be at least 18 years of age to obtain an auto loan, or register a car in your name. Insurance companies also will not sell a car insurance policy to a minor.
There are exceptions to these rules, however, so while it might all seem like doom and gloom, some options might be available to a teen driver seeking that new car joy. Before you purchase a car, it’s important to ask questions and do research to ensure you’re buying the vehicle that best suits your needs for the most competitive price.
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How old do you have to be to register a car?
Most states require you to be at least 18 years of age to register a car in your name. When you register a car, it means you pay taxes on it and have obtained auto insurance, both of which you legally need to be an adult to do. A parent or legal guardian typically needs to be involved in this process.
Insurance is the main obstacle teen drivers have when it comes to car ownership. Minors cannot enter into a legally binding contract because they are not considered legal adults, so an insurance company is unlikely to offer them a policy. Auto insurance companies also consider your credit-based insurance score when determining your premium, which means you also need to have a credit history.
IMPORTANT! In most cases, you cannot insure a car that you don’t own. However, a parent may be able to add their child to an existing car insurance policy.
How old do you have to be to get an auto loan?
Since an auto loan is considered a legally binding contract, most lenders will not make an offer to anyone under 18. Minors cannot be held to the terms of a contract, so the few auto loan lenders who would extend a loan to them will typically require a parent to serve as a co-signer.
Another issue for minors is that lenders often want to see a strong credit history and a good credit score before offering a loan. Since minors typically don’t have credit, they would make obtaining a car loan difficult.
Can a 16-year-old lease a car?
As mentioned above, because minors cannot be held to the terms of a contract, it’s unlikely anyone under the age of 18 could lease a car. Leasing also requires good credit and a reliable source of income, neither of which teenagers are likely to have.
Some leasing companies allow a parent or guardian to sign the lease and add other drivers with permission. This will allow any licensed driver to drive the car, even if they are under 18.
When can a minor buy a car insurance policy?
Emancipated minors are free to buy, register, and insure a vehicle in their name. Once you are designated as emancipated minor, your age is no longer an issue when it comes to the car buying process. You can be held to a contract, and are freed from control of your parents or legal guardian. Otherwise, teen drivers will need to join a parent or guardian’s insurance policy.
Pro Tip
Since teens are inexperienced drivers, car insurance companies consider them to be high-risk drivers, and will likely charge high insurance rates.
What should I ask before buying a car?
Regardless of whether you’re buying a car from a private dealer or a new car dealership, you’ll likely have some questions before making your purchase. These can differ if you’re buying a brand new car vs. a used car, but some of the same information still applies to both.
Does this car fit my needs?
It’s important to determine what is most important to you in a vehicle before making a purchase. For example, are you concerned about the car’s safety rating? How important is the gas mileage? Are you going to be towing things with the car? Will you need four-wheel-drive?
Coming up with a list of things you want in a car can help you narrow down your options and provide a clear idea of what you want before visiting a dealership.
What are my loan options?
Being aware of your credit standing and taking a look at your credit report can help you get an idea of how you will pay for and finance your vehicle. Speaking with a lender about loan options before visiting the dealership will also help prepare you for negotiations.
For example, getting pre-approved for a loan before visiting a dealership can put you at an advantage when negotiating the final price of the car.
What is the warranty?
If a vehicle comes with a good warranty, it can save you money on repairs and maintenance in your first years as the vehicle owner. Common warranties for new cars can range from three years or 36,000 miles (manufacturer’s warranty) to five years or 60,000 miles (powertrain limited warranty).
Pro Tip
For used cars, you may be able to inherit the remaining period of the warranty if you purchase a vehicle while it’s still in effect.
What is the car’s history?
When buying a used car, it’s important to know what condition it’s in and how it was treated by the previous owner, including how often it was taken in for maintenance and repairs, past accidents and damage, and how many times it was bought and sold.
Companies like CARFAX and AutoCheck allow you to look up a car using its vehicle identification number (VIN) and will provide you with a report on the vehicle’s history. You can also take the car to a mechanic before you purchase it, who can help you assess the car’s condition.
IMPORTANT! A vehicle’s history report will also reveal the kind of title a car has. This could make a huge difference as a car owner, especially if the car has a branded title.
When’s the best time to buy a car?
Similar to buying or selling a home, you may get a better deal on a car during specific times of the month, day of the week, or production of your desired car. Before you decide on your purchase, make sure you have a decent down payment saved.
End of the month
At the end of the month, car dealers are typically looking to offload vehicles so they are able to meet their sales goals, which can trigger financial incentives from the automakers. Salespeople also have quotas to meet and can be more likely to offer you a deal if they have yet to meet their goal for that month.
Waiting until later in the year is also a good time to purchase a car because many of the same circumstances apply. Additionally, many dealerships have sales around the holidays throughout the year.
Mondays
Mondays are generally considered the best day of the week to buy a car. Weekends are usually busy for car dealerships, which means early in the week it can be quieter. This gives you more time with the salesperson to go over the ins and outs of the vehicle you want to purchase.
Auto loan lenders are also typically only open during the week, which gives you the opportunity to speak with them about financing options for the vehicle. If you go to a dealership on the weekend, you have to take the salesperson at their word that they are offering you a good deal, which limits your options.
Pro Tip
Dealerships frequently offer their best sales during three-day weekends. For example, Memorial Day and Fourth of July are heavily-promoted sales weekends for car dealers. Dealerships are typically crowded during these weekends, so the Monday of a three-day weekend would not be a good time to visit a car dealership.
A car has been redesigned or discontinued
Purchasing a car near the end of its so-called design cycle, which typically lasts about five years, might help you get it for a discounted price. This is because most new car buyers want to purchase one of the newer models.
Vehicles that have been discontinued also tend to depreciate more quickly than more current models. This might not matter to buyers looking to own the vehicle for a longer period of time, but it does not work to the advantage of lease customers looking for vehicles with high residual values.
FAQs
Can a minor buy a car from a private seller?
Purchasing a vehicle from a private seller involves much of the same process as buying a vehicle from a dealership, which means many of the same rules and state laws apply. Even if you live in a state where it’s legal for a minor to be listed on the registration, you still have to get an auto insurance policy, which is nearly impossible for a minor to obtain.
Can a 16-year-old buy a car with cash?
Most states don’t allow someone under the age of 18 to have a car title in their name. So even if you buy a car with cash, this is illegal because you are a minor. Certain states, like Texas, do allow minors to have a car title in their name.
Even if you are able to obtain a title, however, you still have to purchase an insurance policy, and car insurance companies will not sell to minors. To combat this, parents can register a car in their name, list the minor as a driver on the car, and add the vehicle to their own car insurance policy.
Key Takeaways
- Most states require you to be at least 18 years of age to register a car in your name.
- Minors cannot be held to the terms of a contract, so the few auto loan lenders who would extend a loan to them will typically require a parent to serve as a co-signer.
- Before buying a car, you should ask yourself a few questions first. This could include what type of car you’re looking for, what your loan options are, and what the car’s history is.
- Emancipated minors are free to buy, register, and insure a vehicle in their name.
- Some of the best times to buy a car are toward the end of the month, on Mondays or long holiday weekends, or once a car model has been redesigned or discontinued.
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