A learner's permit is an acceptable form of identification, which a lender requires for an auto loan. To obtain an auto loan, you must purchase a full-coverage insurance policy for the vehicle and maintain it throughout the loan term. If you're an inexperienced driver, you're likely to pay higher costs for auto insurance. Consider your insurance needs and costs to determine if pursuing an auto loan while you have a learner's permit is worthwhile.
Credit Requirements
Auto loan providers aren't interested in your driving history. You don't need a driver's license to apply for a loan or obtain an approval. Auto loan providers require a valid Social Security number to check your credit history. Expect to also prove your income. Most auto loan providers prefer that a borrower have at least a two year employment and address history. You'll also prove your income by providing your most recent paystub or tax information if you're self employed. Some lenders may require additional information, such as references, proof of address or proof of paid debts.
Auto Insurance Requirements
Most states require drivers to purchase and maintain a liability insurance policy for registered vehicles, but lenders require more coverage. To protect itself from loss, your lender requires you to purchase a full-coverage insurance policy and maintain it for the term of your loan. Full-coverage insurance, which includes collision and comprehensive coverage, is the most expensive policy you can purchase. Auto loan providers also require higher coverage limits and lower deductibles, which also raise insurance cost. Without a driver's license or driving experience, you might find it difficult to afford the coverage you need for an auto loan.
Insurance Issues
Most lenders do not allow a lone borrower to insure a financed vehicle in a different person's name. If you have a cosigner, you may choose to register and insure the vehicle in your co-owner's name, while your name still remains on the vehicle's title and loan. Ask your auto loan provider for its rules before you sign any paperwork. Many states also require that the registered owner of a vehicle provide insurance coverage, so registering the vehicle and insuring it in another person's name might not be an option even if your lender allows it.
Lowering Your Insurance Cost
If you find that you can't afford your own insurance with a learner's permit, ask someone else to add you to his insurance policy, which is a cheaper option. You might ask someone in your household to help. If you have to purchase your own policy, consider shopping around to brokers or online providers, as these providers can usually provide lower insurance costs. You may have to wait until you're fully licensed before pursuing your own insurance policy and auto loan.
0 comments:
Post a Comment