Can a minor buy a car?

A teenager can hand over cash for a car, but the deal rests on shaky legal ground. A minor buying a car runs into three hurdles: contract rules, title and registration rules, and insurance. Each one works a little differently from state to state. Here is how they fit together, and what a private seller should ask for before handing the keys to a buyer under 18.

Why sellers worry about contracts with minors

In most states, a person under 18 can sign a contract, but the minor can usually cancel it later. Lawyers call that a voidable contract. The adult on the other side is bound by the deal, while the minor may be able to walk away from it. For a car sale, that can mean a teen returns the car and asks for the money back. States differ on what the minor has to give back and how much the seller can keep for damage or use.

That risk explains why dealers and lenders ask for a parent or another adult to co-sign. A co-signer is a full adult party to the contract. If the minor backs out, the seller or lender still has someone who is bound by the terms. It is also why a minor usually cannot get a car loan alone.

Can a minor hold title in their own name?

This part depends heavily on the state, and the answers are far apart. Three states show the range.

Pennsylvania takes the most open approach. In a bulletin to its agents, the Pennsylvania Department of Transportation (PennDOT) said nothing in the state Vehicle Code bars a minor from owning a vehicle, and the code does not require a parent to consent to a minor's title or registration application. PennDOT said it treats a minor the same as an adult for titling. The minor still needs the same proof of ownership, identification, and insurance as anyone else.

Wisconsin sits in the middle. The Wisconsin Department of Transportation (WisDOT) says children under 18 are not eligible to register a vehicle unless a Consent to Purchase Certification is completed. The parent, guardian, or legal custodian signs it, and that signature must be notarized. The consent can go on the title application or on a separate form, MV2924.

Michigan puts the duty on the seller. A Michigan Secretary of State (SOS) form says state law requires a vehicle owner to get parental permission before selling a car to an unemancipated person under 18. One parent or the legal guardian can sign, and the seller keeps the form for three years. The same form warns that it does not change the contract liabilities of a sale to a minor, so the voidable-contract risk stays.

Other states have their own rules, and some require an adult on the title. Even where state law is silent, a title clerk or an insurer may still ask for an adult on the paperwork. Check with your state motor vehicle agency before any money changes hands.

Registration and insurance are the next hurdle

Even where a minor can hold title, registration usually requires proof of insurance. Insurance is a contract too, so many insurers will not write a policy for a minor alone. The usual fix is adding the teen as a driver on a parent's policy. Some insurers want the car titled to the parent, or to the parent and teen together, before they will list it on the family policy. Call the insurer before anyone signs.

Owning a car and being licensed to drive it are separate questions. A teen with only a learner's permit may be able to own a car in some states and still be barred from driving it alone. Make sure the driving rules fit the plan before the purchase.

The parent-as-buyer approach

For most families, the cleanest route is simple. The parent buys the car, signs the vehicle bill of sale, and titles the car in the parent's name or in both names. The teen drives it with permission and is listed on the parent's insurance. Because an adult signs every contract, the seller has no voidable-contract worry, and any lender deals with an adult. Keep in mind that the parent on the title is the legal owner. Toll notices, parking tickets, and other bills tied to the plate go to the owner of record.

Joint titling with the teen can make sense when the goal is to hand the car over fully at 18. In some states, co-owners both have to sign to sell later, so a joint title can slow down a future sale. Ask your title office how the words and and or between owner names work there.

What a private seller should require

If a teen answers your ad, slow down and ask a few questions. Confirm the buyer's age first. If the buyer is under 18, ask a parent or guardian to come to the sale.

Put the adult on the paperwork. The safest setup lists the parent as the buyer on the bill of sale and the title. If the teen will be the named buyer, have the parent sign too, as a co-buyer or with a written consent, and keep a copy. In Michigan, that signed parental consent is a legal requirement.

Take payment you can verify, such as cash counted in person or a cashier's check confirmed with the issuing bank. Add an as-is clause and the odometer reading to the bill of sale, and have every signer date it. Keep copies of every document, including any consent form, for several years. If the sale is ever challenged, those papers show that an adult agreed to it.

What changes at 18

Once the teen turns 18, new contracts are binding the same way they are for any adult. The new adult can buy, finance, title, and insure a car on their own. In many states, a person who keeps using a car after turning 18 may lose the right to cancel the original purchase, though the exact rule depends on state law.

A car titled to a parent can be moved into the young adult's name with a new title application. Some states reduce or waive tax on transfers between family members, so ask your title office what applies before you file.

Sources

• PennDOT Driver and Vehicle Services Update, Bulletin 05-06 (vehicle sales to minors)
• Wisconsin DMV: Consent to purchase certification
• Michigan Secretary of State: Form B-32, Parental Consent to Sell a Vehicle to a Minor