How Can a 16-Year-Old Get a Good Car Loan With a Permit?


The short answer to this question is you can't. Even though car loans are some of the easiest kinds of financing to get, a loan is a legal contract. You must be 18 to sign a legal contract in the United States. However, with the help of an adult you can both buy a car on credit and begin building responsible credit habits that will help you succeed later in life.

Why Not?

Forget the fact that you have no credit. Ignore the fact that you're far more likely to wreck the car before the loan is paid off. In the United States, only an adult can be held responsible for a legal contract. This means if you sign a contract, there are no legal repercussions for you if you don't hold up your end of the deal. For this reason, nobody's going to loan you money on a contract. They can't do anything if you never pay them back.

Traditional Loans

You'll have to get a legal adult's help in securing an auto loan from any traditional source. However, it's a good idea to involve yourself in as much of the process as you can. You might not be able to sign anything, but if you go through the process with your adult, you'll learn how it's done for when you are old enough to get your own loan.

Personal Loans

Another option would be to get a loan from an adult you know. Even if it's with your favorite grandmother, set up specific terms of payment and stick to them. This will help you practice for later on. If you can, get the loan from someone who's not in your immediate family. With successful payment, you can turn that person into an effective personal reference when you look for your first adult credit.

Borrowing From Savings

A third option would be to 'borrow' the money from savings already in your name. If you have money saved that's earmarked for another purpose (like college), your parents may allow you to finance the car that way, making regular monthly payments to restore the funds in time for it's intended purpose. Be sure to include interest in this loan to make up for interest it doesn't earn while you're paying on the loan. This may be a hard sell to most parents, but if you present a well thought out plan they just might go for it.

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  • Interview with Bart Brick, Loan Officer (ret), US Bank, 2009
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