A driver’s license is an accepted form of identification that lenders require for a car loan. To get a car loan, you must purchase a full insurance policy for the car and maintain it throughout the loan term. If you are an inexperienced driver, you may have to pay higher costs for auto insurance. Consider your insurance needs and expenses to determine if pursuing a car loan while you have a driver’s license is worth it.
Credit requirements
Car loan providers don’t care about your driving history. You don’t need a driver’s license to apply for a loan or get approved. Auto loan providers require a valid Social Security number to check your credit history. Expecting also proves your income. Most auto loan providers prefer borrowers with a work history and address of at least two years. You’ll also prove your income by providing your most recent payroll or tax information if you’re self-employed. Some lenders may request additional information, such as references, proof of address, or proof of debts paid.
Auto insurance requirements
Most states require drivers to purchase and maintain liability insurance policies for registered vehicles, but lenders require more coverage. To protect yourself from loss, your lender requires you to purchase a full insurance policy and maintain it within the term of your loan. Full coverage, including bumps and comprehensive coverage, is the most expensive policy you can buy. Auto loan providers also require higher insurance limits and lower deductibles, which also increase insurance costs. Without a driver’s license or driving experience, you may find it hard to afford the insurance required for a car loan.
Insurance issues
Most lenders do not allow a single borrower to insure a car that is funded in someone else’s name. If you have an ID, you can choose to register and insure the car in the name of the co-owner, while your name remains the same on the car’s title and loan papers. Ask your auto loan provider for their rules before you sign any paperwork. Many states also require the registered owner of a vehicle to provide insurance, so registering the vehicle and covering it in someone else’s name may not be an option even if your lender allows it.
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Reduce your insurance costs.
If you find that you can’t buy your own insurance when you have a study permit, ask someone else to add you to their insurance policy, which is a cheaper option. You can ask someone in your family for help. If you have to buy your own insurance policy, consider shopping around brokers or online providers, as these providers can often offer lower insurance costs. You may have to wait until fully licensed before pursuing your own insurance policy and car loan.