Can you finance a car without a license?

October 8th, 2022 by

Buying a car is an exciting process that affords you the independence to go where you want and need to go. But if you don’t have a driver’s license, you may wonder whether you can finance a car without one. No matter the reasoning behind your decision, review this guide to find out whether it’s an option to finance a car without a license.

Can You Finance a Car Without a License?

Although it might come as a surprise, no law in effect says you have to have a driver’s license to buy a vehicle in the United States. But the question of whether you can secure financing to make that purchase without a driver’s license may have a different answer, depending on the lender.

Proof of Identification

Some lenders require loan applicants to show proof of identification, which is usually a state-issued driver’s license. You might be able to use another valid ID, such as an identification card or passport, but you’ll have to clear that with your lender in advance.

Updating the Title

Part of the auto financing process often involves changing the car’s title. If you pay cash, the title goes into your name. But when you finance a car, the lender places a lien on the vehicle until you pay off the loan in full. You’re still listed on the title as the registered owner of the car, but the lender usually keeps the title in their possession until the payoff. Upon paying off the full amount of the loan, you should receive the title by mail.

Since you might need to show proof of identification for the titling process, not having a driver’s license could be an issue in this step. But if you’re buying the car for someone with a valid license, you could put the title in their name.

Registering the Vehicle

You also have to register a vehicle to meet the terms of most lender requirements. Registering a car in your state usually requires a valid driver’s license. However, you may be able to work around this requirement by having the driver of the vehicle go through the registration process. Only the owner listed on the title can register the car, so make sure to go through the titling process accordingly.

Why Would You Buy a Car Without a License?

There are several reasons why you might be considering a vehicle purchase without a valid driver’s license. You could want to purchase a vehicle to have someone else drive you around, buy a car as a gift for someone else, or secure a vehicle while you’re in the process of earning your license. If you cannot drive due to a disability, a caregiver might be able to drive you to your destinations, but they need a functional vehicle to do so.

Car collectors may also want to finance vehicle purchases, even if they don’t plan to drive their cars. You could own a business and want to secure a vehicle for an employee who is a licensed driver. Regardless of the reason why you might want to buy a car without a license, whether or not you can do so depends on the lender.

Financing a Car With a Suspended License

If your license is suspended, you may wonder whether you can finance a vehicle purchase during that time. Each state has different requirements that apply to license suspensions, so check the laws in the state where you’d be buying the car and securing the loan. You might have to wait until your license gets reinstated to go through the buying process.

Steps to Finance a Vehicle

Whether you’re buying a car for someone else to drive or purchasing a vehicle before you earn your license, it’s helpful to know what to expect in the financing process. These steps can be helpful as you submit your information for an auto loan.

Submit an Application

The first step in financing a vehicle, whether you have a license or not, is submitting an application. You’ll provide details about yourself, including your name and contact information, along with financial details, like your income and any outstanding debt. A lender uses the application to determine whether you can qualify for an auto loan and how much they’ll approve to loan you. You usually don’t need to provide proof of a driver’s license in this step.

Review Your Pre-Approval

Upon approval, the lender will provide you with a prequalification notice outlining how much you’re approved to borrow based on your credit. If you have a specific car in mind, reviewing the pre-approval will help you determine whether it fits into the budget. You can add the approved loan amount to the amount of cash you have to put down to get the total amount you can afford to spend on a vehicle.

Find Your Car

Before you can finish the process, you need to pick out the car you want to buy. Some lenders have restrictions in place on where you can buy from when borrowing from them. For example, you probably can’t secure financing through a dealership for a car sold by a private seller.

Complete the Loan

After you find your car, the final step in the process is completing the loan. If you finance through the dealership, the purchase and loan finalization steps can typically take place at the same time. You’ll work with a salesperson and a financing expert to complete the sale. But if you go through a third-party lender, such as a bank or online lender, they’ll either issue payment to you or directly to the seller.

You will need to provide proof of identification when finalizing your auto loan, but you don’t necessarily have to use a driver’s license. Just use a different form of ID.

At Cochran Cars, we work with buyers located throughout the Youngstown, Ohio, area, offering competitive pricing on new and pre-owned cars and appealing financing options. If you’re wondering whether you can finance a car without a license, contact us and speak with a member of our financing department. We’ll do whatever we can to get you behind the wheel of a new or used ride while adhering to all local requirements.

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