When you or a dependent learns to drive, it’s common to have a lot of questions, such as: Can I buy a car with a learner’s permit?
If you are at least 18 years old, you can buy a car with a learner’s permit. However, you probably won’t be able to register the vehicle until you have your license. If you are paying cash for the car, this shouldn’t be a problem, but it might make it difficult to get financing.
In terms of insurance, a permit holder typically does not have to be included on a car policy until they have their license.
How to Buy a Car With a Learner’s Permit?
In general, purchasing a vehicle with or without a learner’s permit is the same. But the procedure is slightly different if you also have bad credit. The subprime lender you need to work with can be difficult to find. However, once you’ve found one, you need to confirm that you’re eligible for a bad credit auto loan.
Subprime lenders typically require a driver’s license as identification, though some may also accept a current state ID. A valid driver’s license is the only form of identification that many of these lenders will accept, so you’ll need to wait to apply for a car loan until you have one.
In other words, unless you’re paying cash, we advise you to resolve any license-related issues before applying for a subprime auto loan.
Although subprime lenders view your credit score, they look at other factors to determine approval, including:
- Income and employment –Make sure you bring in a copy of your most recent computer-generated pay stub showing year-to-date earnings because subprime lenders typically have a minimum monthly income requirement of $1,500 to $2,500 before taxes from a single source. Additionally, they demand a minimum of three years of stable employment.
- Residency –Bring a copy of a recent utility bill in your name that shows the address that is listed on the application.
- Down payment –You usually can’t avoid making one, but you don’t have to put much money down. Subprime lenders typically demand a minimum deposit of $1,000 or 10% of the vehicle’s selling price, whichever is less.
- Cosigner –Some lenders demand a cosigner, while others don’t, for customers with poor or no credit histories. Having a cosigner, however, can increase your chances of being accepted and could make you eligible for a lower interest rate.
However, even if you pay in cash, you’ll run into another issue if you don’t yet have your driver’s license.
Challenges of Buying a Car Without a License
If you’re trying to find the right vehicle before you have your official driver’s license, you should prepare for a few potential obstacles:
- Insurance: It’s important to locate an insurance provider who will work with you if you want to purchase a car while you still have your learner’s permit. Unlicensed drivers may not be eligible for auto insurance coverage from some insurance companies. Additionally, companies that insure unlicensed drivers could charge higher premiums
- Registration: When it comes to vehicle registration, every state has a different set of regulations. Some states, such as Ohio and Delaware, require a driver’s license before you can register your vehicle
- Financing: Without a driver’s license, it may be difficult to obtain a car loan. The procedure might be simpler if you have a learner’s permit or another form of state identification that you can use to demonstrate your identity to a lender. Of course, you may also need to satisfy an auto lender’s other borrowing criteria — such as minimum credit score and debt-to-income ratio requirements — in addition to proving your identity.
Read about
- How to Get Car Insurance Before Buying a Car?
- Can You Buy a Car Without a License?
- Can You Refinance a Car With the Same Lender?
Buying a Car Without a Driver’s License
The following four steps can help you navigate the process if you’re asking yourself: “With a learner’s permit, can I purchase a car?”
- Figure out your budget. It’s critical to be aware of how much you can comfortably spend on the purchase whether you’re paying cash for the car or applying for an auto loan. When borrowing money, be sure to factor in the total cost of interest and fees as well as the monthly payment you can afford.
- Secure financing. It can be useful to check your pre-qualification for an auto loan before you start looking for a car, unless you intend to pay for it in cash. If you’re an unlicensed buyer, you might think about including a parent or spouse on the loan with you to simplify the financing and insurance processes.
- Search for an insurance provider. Many lenders might demand that you possess a thorough auto insurance policy (also known as full coverage) when you finance a vehicle. Additionally, the majority of states mandate liability insurance with a certain minimum limit. Therefore, before you can finalize most auto loans with a learner’s permit, you might want to locate an insurance company that provides insurance to people without a license.
- Find the right vehicle. You can start looking around for the ideal vehicle once you have a set spending limit and access to financing (or cash).
Summary: Can You Buy a Car With a Learner’s Permit?
A learner’s permit may be sufficient to purchase a vehicle. However, in some states it might not be possible to register the car. You might struggle to find affordable auto insurance. Therefore, you could spare yourself a lot of potential stress if you can hold off on buying a car until after you are approved for an official driver’s license.
