If you are a minor and want to finance a car purchase, you might be out of luck. In the United States, you must be 18 years old to be legally able to enter a contract. Sadly, financing a new car purchase means entering into a legal contract with your loan originator.
How to Get a New Car at 16
If you are still determined to get a new car at 16, there is a way. If you want to finance a new car, your best bet is to buy a car with your parents. Once your parents get the auto loan, you can make the payments on the loan yourself. In this scenario, your parents will be listed as the vehicle owners on the title.
Once you turn 18, you can have the car refinanced, and possibly at a lower interest rate. When your parents refinance the car, you can be added as a cosigner once you’re 18. If you have been making all of your car payments on time and in full, you can remove your parents from the loan after refinancing.
Preparing to Buy
Since you are not of legal age to finance a car on your own, you can use the downtime to focus on increasing your car loan qualifications. While you wait, try to build up your credit score. If you want to begin building credit at a young age, ask your parents to become an authorized user on their credit card account.
Being added as an authorized user is a great way to build credit at a young age. You will learn more about credit and borrowing by actually using credit. If you do become an authorized user, make sure to pay all your credit card bills on time and in full.
When you build credit, you increase your qualifications as a car buyer. Lenders love applicants with a healthy credit score since they pose a lower risk. As a reward, you could save big on interest expense since you have strong credit. You can boost your credit even more by keeping your credit utilization rates low and by regularly using your credit card.
Even though you cannot finance a car just yet, it’s never too early to start preparing. In the meantime, focus solely on building up your credit score and credit report. If you are looking to buy a new car but are in need of financing, CrediReady can help. Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations. Take a moment to fill out our free no-obligation loan inquiry form and start shopping for your dream car today!