How to Finance a Car at 17

Hello there, young drivers! Congratulations on earning your driver’s license and taking the first steps towards independence. One of the first things that come to mind after obtaining a license is the need for a vehicle. However, being 17 years old, financing a car may seem overwhelming or even impossible. It is indeed challenging, but not impossible. In this article, we will walk you through the process of financing a car at 17 and help you make a feasible plan to own your vehicle.

First things first, being a minor can be a disadvantage because you cannot sign a legal contract, such as a car loan agreement, without a co-signer. This may be a parent, a legal guardian, or someone with a reliable credit history who is willing to guarantee that the loan will be repaid. Failing to repay the loan could impact the co-signer’s credit score, so make sure to discuss your financial plans with them beforehand and ensure that you can make the monthly payments on time.

How to Finance a Car at 17 Years Old

Understanding Car Financing for a 17-Year-Old

Financing a car can seem daunting, especially for a 17-year-old with little to no credit history. It is important to understand the options available and to be prepared for the financial responsibility that comes with owning a car.

Types of Car Financing Available

There are various ways to finance a car, including:

Loans from Banks or Credit Unions: Traditional lenders like banks or credit unions offer car loans at reasonable interest rates. To qualify for such loans, you need to have good credit history, a stable income and employment status. The loan amount and repayment tenure will depend on the lender’s policies.

Car Loans from Dealerships: Dealerships also offer financing options to customers. They might partner with financial institutions or have in-house financing options. These loans might come with higher interest rates and stricter terms and conditions.

Personal Loans from Family or Friends: It might be tempting to ask family or friends for a personal loan to finance a car, but it is important to be cautious. Such loans might not come with professional terms and conditions, and failure to repay could strain relationships.

Qualifying for Financing

Lenders consider various factors when deciding whether to finance a car for a 17-year-old. These include:

Credit Score: As a young borrower, your credit score might not be substantial enough to qualify for traditional loans. It might be helpful to start building your credit score early by opening a credit card with a small limit and making timely payments.

Income: Lenders will evaluate your income to determine whether you can afford the loan repayments. If you have a part-time job or are still studying, you might need a co-signer with a stable income to qualify for financing.

Employment Status: A stable employment history shows lenders that you have a steady source of income to repay the loan. If you have recently started a new job, you might need to wait for a few months before applying for a car loan.

Managing Car Payments

Owning a car comes with additional expenses beyond just the monthly car loan payments. It is important to create a budget that includes:

Insurance: Car insurance is a legal requirement in most states. It is important to shop around for the best rates and coverage that fits your needs.

Maintenance: Regular maintenance and repairs are necessary to keep your car running smoothly. It is helpful to set aside some money each month for routine maintenance like oil changes and tire rotations.

Unexpected Expenses: Emergency repairs or unforeseen expenses like road tolls or parking fees can strain your budget. It might be helpful to have a backup savings account or emergency fund to cover such expenses.

In conclusion, financing a car at 17 years old might seem overwhelming, but with the right preparation and information, it can be a manageable and rewarding investment. It is important to research your options, understand the financial responsibility and create a budget that includes all expenses associated with owning a car.

Tips for Financing a Car at 17

Save for a Down Payment

Building up a down payment is a crucial step to securing financing for your car, especially if you are a teenager. The larger the down payment you can make, the better. By putting down money upfront, you can show lenders that you are serious about making the purchase and are willing to invest your own funds into the vehicle. Additionally, having a substantial down payment can help you secure financing at a lower rate, which can save you thousands of dollars in interest payments in the long run.

Build Your Credit Score

Your credit score is one of the most important factors that lenders consider when approving financing for a car. If you don’t yet have a credit history, it’s time to start building one. One way to do this is by obtaining a credit card and making timely payments. This will help you establish credit, which will ultimately improve your chances of obtaining financing for a car. Just be sure to use your credit card responsibly and only charge what you can afford to pay off each month.

Explore Co-Signers as an Option

If you are struggling to secure financing on your own, consider enlisting the help of a co-signer. A co-signer is typically a parent or guardian who has a higher credit score and can vouch for your ability to make car payments. By having a co-signer, you may be able to obtain better financing terms and a lower interest rate than if you were applying on your own. However, keep in mind that if you are unable to make payments on the car, your co-signer will be responsible for paying off the loan. Therefore, it’s essential to make sure you are financially capable of taking on this responsibility before getting a co-signer involved.

Consider Alternative Financing Options

If traditional financing isn’t an option, there are alternative financing options to consider. Some of these options include personal loans, credit unions, or in-house financing from the dealership. Each option has its pros and cons, so make sure to do your research and find the one that best fits your needs and financial situation. Just be aware that alternative financing options may come with higher interest rates, shorter repayment terms, and stricter eligibility requirements.


In conclusion, financing a car at the age of 17 can be challenging, but it’s not impossible. By saving up for a down payment, building your credit score, exploring co-signers, and considering alternative financing options, you can increase your chances of securing financing for the car you want. Remember to do your research and only take on financial obligations that you can afford to repay. Good luck on your car financing journey!

How to Avoid Pitfalls and Scams

When financing a car at 17, it’s important to be aware of potential pitfalls and scams. Here are some tips on how to avoid them:

Avoid Predatory Lenders

Some lenders may take advantage of young borrowers by offering financing with very high interest rates or unclear terms and conditions. These predatory lenders may seem like a quick fix for getting a car, but they can trap you in a cycle of debt that can be difficult to escape. To avoid these lenders, do your research and compare rates and terms from multiple lenders before making a decision. Also, beware of lenders who pressure you to sign without giving you time to review the paperwork or answer any questions you may have.

Read the Fine Print

Before signing any financing agreement, make sure to read the fine print carefully. This means paying close attention to interest rates, fees, and repayment terms, among other details. If there’s anything that you don’t understand, ask questions until you are confident you know what you are agreeing to. Some lenders may try to sneak in hidden fees or penalties that can make your monthly payments more expensive than you initially thought, so it’s crucial to review every detail of the agreement.

Stay Within Your Budget

One of the biggest mistakes that young car buyers make is taking on a loan that they can’t afford. To avoid falling behind on payments or defaulting on the loan, it’s important to keep your monthly car payment and other related expenses within your budget. This means factoring in additional costs like insurance, gas, and maintenance when calculating the overall cost of the vehicle. If you’re not sure what you can realistically afford, consider seeking the advice of a financial advisor or taking a budgeting course.

By following these tips, you can navigate the world of car financing with confidence and avoid falling victim to scams or predatory lenders. Remember to always do your due diligence and thoroughly research your options before making any financial decisions.

Conclusion: Take the Keys to Your Dream Car at 17!

Congratulations! You have made it to the end of the article, and now, it’s time to do some research and start the process of financing your dream car at 17. Remember to assess your budget and analyze the loan options to ensure that it’s a feasible and affordable option for you. Keep in mind to consider insurance, maintenance costs, and registration fees. Also, remember the importance of building a positive credit history and making timely payments to avoid any additional fees or penalties. With the right research and preparation, you can be holding the keys to your very own car in no time!

Thank you for taking the time to read this article. We hope that it has provided you with valuable insights and that you will come back to check out our other articles in the future. Good luck on your car loan journey!


1. Can you finance a car at 17?
Yes, you can finance a car at 17, but only if you have a co-signer who has good credit.

2. What’s the best way to finance a car at 17?
The best way to finance a car at 17 is to have a co-signer with good credit. This will increase your chances of being approved for a loan or getting a lower interest rate.

3. Can you buy a car with no credit?
It’s possible to buy a car with no credit, but it can be difficult to get approved for a loan. You may need to have a co-signer or put down a larger down payment to secure a car loan.

4. What is a reasonable interest rate for a car loan at 17?
The interest rate for a car loan at 17 can vary depending on the lender. However, a reasonable interest rate for a car loan at 17 would be around 4-5% APR.

5. How much should I put down for a car loan at 17?
A general rule of thumb is to put down at least 20% of the car’s purchase price for a car loan at 17. This will help to reduce the amount of the loan and the monthly payments.

6. Can I get a car loan with bad credit at 17?
It’s unlikely to get a car loan with bad credit at 17. You may need a co-signer with good credit to increase your chances of getting approved for a loan.

7. Is it necessary to have insurance when financing a car at 17?
Yes, it’s necessary to have insurance when financing a car at 17. Most lenders require you to have comprehensive and collision coverage to protect their investment.

8. What’s the difference between a co-signer and a co-buyer?
A co-signer is someone who agrees to pay the loan if the borrower defaults. A co-buyer is someone who shares ownership of the car and shares responsibility for making payments.

9. Can I trade in my old car to buy a new car at 17?
Yes, you can trade in your old car to buy a new car at 17. This can help to reduce the amount of the loan and lower your monthly payments.

10. What happens if I miss a car loan payment at 17?
If you miss a car loan payment at 17, you may be charged a late fee or a penalty. This can damage your credit score and make it harder to get approved for loans in the future.

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About the Author: Eibar Schmidt

Eibar is a versatile journalist, copywriter and digital editor who's worked across the media in newspapers, magazines, TV, teletext, radio and online. Also He is a casual autocrosser and occasional track day participant who believes everybody should drive cars that make them happy.

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