Can a 17 Year Old Get a Car Loan With a Co-signer?

Securing a car loan presents a common hurdle for young individuals who have not yet reached adulthood. Lenders often hesitate to approve loans for those under a certain age due to legal and financial considerations. This article explains how a co-signer can help a 17-year-old obtain vehicle financing.

Understanding Age Requirements for Contracts

Entering into a legally binding agreement, such as a car loan, requires contractual capacity. This legal concept refers to an individual’s ability to understand the terms and obligations of a contract and be held accountable for them. In most jurisdictions across the United States, the age of contractual capacity aligns with the age of majority, which is 18 years old.

Individuals under the age of 18 are considered minors and lack the legal capacity to enter into binding contracts on their own. Contracts signed by minors are voidable, meaning the minor can choose to cancel the agreement without penalty. This legal protection for minors is a primary reason why a 17-year-old cannot independently secure a car loan and requires a co-signer.

The Co-signer’s Role in a Car Loan

A co-signer on a car loan is an individual who legally agrees to share the responsibility for the loan’s repayment with the primary borrower. This person, an adult with established credit and income, lends their contractual capacity and financial strength to the application. Their presence provides assurance to the lender that the loan will be repaid, even if the primary borrower defaults.

The co-signer assumes significant legal and financial liabilities. They are equally obligated to repay the entire loan amount if the 17-year-old borrower fails to make payments. This responsibility extends to the co-signer’s credit report, as any missed or late payments will negatively impact their credit score. Lenders look for co-signers with a strong credit history, stable employment, and sufficient income to cover the loan payments.

Applying for the Loan with a Co-signer

When applying for a car loan with a co-signer, specific information and documentation are necessary from both parties. The 17-year-old applicant will need to provide identification, such as a driver’s license or state ID, and proof of enrollment if they are a student. The co-signer will need to provide more extensive financial documentation.

The co-signer’s required documents include proof of income, such as recent pay stubs or tax returns, and employment history. Lenders will also assess the co-signer’s credit history through a credit check, looking for a strong credit score and a manageable debt-to-income ratio. Both the 17-year-old and the co-signer will complete and sign the loan application. The lender will then evaluate the co-signer’s financial profile to determine approval and loan terms.