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I am under 18, currently shopping for a car. Like many people, I don't have enough money sitting in my bank account to purchase a good car, around $6,000 to $10,000. However, credit checks have prevented me from being able to lease, and loan, due to my parents' bad credit. I personally am quite responsible with money, but short of emancipating, which has quite significant legal disadvantages, I can't find any ways of breaking free from my parents' credit history. Any ideas?

Note: Rather than making assumptions about my financial background, just assume I am trying to get credit for leverage in an investment but I'm underage and my parents have bad credit. How would I do it?

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    I think you can make due with a used older car for $2000, buying a car is usually a really bad investment. :-) – V M May 24 '14 at 14:53
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    Consider this: instead of borrowing money to purchase a "good" car, see if you can scrape up enough cash to purchase an "acceptable" car: not one that you would keep for years, but one that would get you from A to B until you could save up enough to buy a better car. Then you will get used to purchasing cars with cash, which will help you avoid the trouble your parents have. – Ben Miller - Reinstate Monica May 24 '14 at 14:53
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    Take this lesson forward with you. Wait to buy things until you can afford to pay cash as much as possible, or buy cheaper. Taking on too much debt early in life will set you back in your financial goals. This is doubly true for things that depreciate quickly, like cars. – JohnFx May 24 '14 at 17:38
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    This is something that if the current older self could tell the younger self it would say "Don't do it...". Parts or Payments... I would rather have parts any day, if you can do some of the work yourself you almost always come out ahead. Never have I gotten a car note (and I've had 7) and not eventually regretted my decision to finance. – Matt Jul 16 '14 at 15:39
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    I'm not sure what makes a car "good". It doesn't matter if you spend $2,000 or $10,000 on a car, both are likely going to need repairs. The more you spend doesn't mean that it's less likely to break. If you want to be smart with your money, buy something for $2000 and save if you want something better. – NotMe Jul 23 '14 at 21:57
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Depending on the state this might not be possible. Loans are considered contracts, and various states regulate how minors may enter into them.

For example, in the state of Oregon, a minor may NOT enter into a contract without their parent being on the contract as well. So you are forced to wait until you turn 18. At that time you won't have a credit history, and to lenders that often is worse than having bad credit.

I can't help with the car (other than to recommend you buy a junker for $500-$1,000 and just live with it for now), but you could certainly get a secured credit card or line of credit from your local bank. The way they are arranged is, you make a deposit of an amount of your choosing (generally at least $200 for credit cards, and $1,000 for lines of credit), and receive a revolving line with a limit of that same amount. As you use and pay on this loan, it will be reported in your credit history.

If you start that now, by the time you turn 18 you will have much better options for purchasing vehicles.

  • New York, by the way, and thanks. To what degree can you build credit as a minor on a secured credit card? – TheEnvironmentalist May 24 '14 at 22:47
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    Having only one loan or line of credit won't get you a great credit score, but it will certainly get you a good enough score that you can take out other loans to establish a decent credit history. Take out the card, use less than 30% of your available balance, and pay your bill for 12 months or so. Your score will be good enough at that point that, while you may not get the best loan offers, you'll get decent ones. – Benjamin Chambers Jul 23 '14 at 21:07
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I am 17 and currently have a loan out for a car. My parents also have terrible credit, and because I knew this I was able to get around it. Your co-signer on your loan does not have to be your parent, at least in Wisconsin, I used my grandmother, who has excellent credit, as my cosigner. With my loan, we had made it so it doesn't hurt her credit if I don't get my payments in on time, maybe this is something for you to look into.

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    "With my loan, we had made it so it doesn't hurt her credit if I don't get my payments in on time" How did you accomplish that? It doesn't seem to jibe with my understanding of "co-signer". – Joe Strazzere Jul 16 '14 at 14:22
  • I actually have something similar on my car loan from 3 years ago, though I don't have the paperwork readily available to give the exact details. The company did in-house financing, but they wanted to ensure that I made at least $X/month to meet the qualifications. I had a "co-signer" sign a document that basically said they could promise $Y/month, but no securities were held against them. This satisfied the financial requirements for the loan. I no longer have that loan as I paid it off ASAP (25% APY ewww). – user17781 Jul 16 '14 at 20:09
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    It won't hurt her credit. It will hurt her bank account if you don't pay. It will hurt her credit if there is no money in her bank account. – gnasher729 Jul 23 '14 at 22:40

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