How Old Do You Have to Be to Get a Loan?

Updated on July 8, 2021

In the United States, there are federal laws that determine who can get a loan and when they are eligible to apply for one. One would think that the lender would be able to decide for themselves; however, the law states that you must be a legal adult (18 years old) to be able to legally enter into and sign contracts such as loans. If you are a teenager, this is probably not what you want to hear if you are trying to purchase a car, sign up for credit cards, or take out personal loans for other large purchases. However, there are a few exceptions to the rule depending on the type of loan and your circumstances!

You must be a legal adult (18 years old) to be able to legally enter into and sign contracts such as loans.

Exceptions to the Rule:

There are a few special circumstances where someone under 18 can get approved for a loan.

  • The first is when the minor can guarantee the loan through a co-signer. Many loan providers will allow co-signers to push someone to the approval line in order to get a loan because they have someone else now on the hook to pay if the minor fails to uphold their end of the contract and repayment schedule.
  • Another exception to the rule is minors who are applying for student loans. The federal student loan programs can be extended to minors who are enrolled in college, university, or trade school. These loans are paid directly to the school to cover the costs of tuition, fees, or on-campus housing. Anything left after the expenses are covered is paid out to the student by the school. A student loan can be a great option to keep people afloat financially while they are focusing on education because the loans do not have to be repaid immediately. Federal student loans also do not require a cosigner, even for minors, and often have very loose guidelines of eligibility.

Should Minors Apply for Loans?

If you are a minor who has an eligible co-signer lined up and ready to sign on the dotted line for you, a small loan for a car or personal loan is a wonderful way to build your credit history and establish a relationship with a lender. These established relationships will make getting other loans like a mortgage or small business loan that much easier in the future. Personalized lending relationships can also help you monitor and increase your credit score which can help you qualify to rent an apartment, get a job, or be able to start lines of credit.  

Finding a co-signer can often be difficult because they are the ones who will be responsible for paying if the borrower does not. Delinquent payments can negatively affect the cosigner’s credit as well and co-signers have strict eligibility guidelines that can sometimes be more stringent than getting a loan on their own. Parents of minors are usually co-signers because of these reasons; however, anyone over 18 who meets the lender’s guidelines can serve as a co-signer and guarantee a loan.

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