Buying a Car Without a License: Legalities and Challenges

Questions answered:

• How do I get an auto loan without a driver’s license?

• Can I title the car without a driver’s license?

• How do I insure a car without a driver’s license?

Buying a car without a driver’s license seems like an odd thing to do. Why spend the money and go through the hassle to own a car you can’t legally drive? Turns out, there are a few valid reasons why you’d want to buy a car without a license. And if you’re reading this, one of those reasons applies to you.

So, here’s the simple, legal answer. Yes, you can buy and own a car without a license.¹ You may have trouble with other aspects of car ownership, though, including financing, registering, and insuring the vehicle. Those challenges may keep your car off the road unless you’re willing to break some laws — which obviously you’re not.

Why buy a car without a license?

How you manage the documentation of car ownership will depend on why you’re buying a car without a license.² For example:

• You have a driver.

   You may be disabled or you just don’t like to drive. Your driver has a license and will be the primary operator of your new car.

   You may need to include your driver on the title and/or registration.

• Owning a business.

   Your employees have licenses and will drive the car.

   Your business will be the car’s registered and titled owner.

• Being a collector.

   You are purchasing the car as an investment and will keep it locked in a garage.

   You may need to add a trusted friend to the title and/or registration.

• Buying the car for someone else.

   You might be gifting the car to a spouse or child.

   Plan on the titling and registering the car in the licensed driver’s name.

• Intending to sell the parts.

   You are in the business of buying used cars and selling off the parts. This might be the simplest situation to manage. Chances are, you’re buying used cars that won’t need registration or insurance.

• You fabricate aftermarket parts.

   You might also be in the business of fabricating aftermarket parts, and you need the car on hand to design new products. In this case, your business owns the car.

• You found a car you want, but don’t have your driver’s license yet.

   In this scenario, hold off on buying the car until you have your license. That will be far easier than navigating the complexities of buying the car before you have your license. You can always find another car if the one you picked outsells.

How to purchase a car without a license

The time needed: 3 hours. Since you are unlicensed, the process of buying a car will deviate from the norm a bit. You can’t do your own test drive or even drive the car home. You’ll have to enlist a good friend to do the driving for you.

1. Buy from a private party without much trouble.

   If you’re buying from a private party, the seller likely won’t care much, as long as the money changes hands.

2. Or buy from a dealership with a bit more paperwork.

   A car salesperson at a dealership might be more reluctant to proceed with the sale — but that’s because it’s uncommon for an unlicensed individual to buy a car. As long as you have other required documentation, including proof of insurance and some form of government-issued identification, you should be able to get the deal done. They may also likely insist someone with a license be present to drive it off the lot.

Applying for a car loan without a license

Your car purchase gets more complicated if you need financing. Your auto lender will ask for your driver’s license. You can offer another form of identification instead, and the lender may or may not accept it. The lender is also likely to see you as a higher-risk borrower. From a lender’s perspective, you have less incentive to stay current on payments when you don’t need the car to get to work, for example.³

These are not insurmountable obstacles, however. Rather than securing financing at the dealership, try applying for an auto loan with your bank. Or use a service like LendingTree to get offers from different lenders. Once you receive contact information from prospective lenders, reach out to each one and explain your situation. You may have to make a few phone calls — and pay a higher interest rate — but it is possible to find a lender that’ll work with you, especially if you have good credit.

Titling and registering the car without a license

Your work isn’t over after you secure your financing, unfortunately. Next, you have to title, insure, and register your car. The titling will be the simplest of the three, but you’ll want to pause before you fill out and sign that paperwork. Here’s why. How you title the car will affect how easily you can register it. And registration is likely to be your biggest challenge in this process.

If you intend to put the car in your child’s or spouse’s name (who has a driver’s license), you shouldn’t have a problem. Things get complicated if you want to title the car in your name, though.

Your state DMV won’t register a car for you if you have no license. Some states, like New York, will allow you to register a car you own in someone else’s name.⁴ But you’ll have to check with your own DMV to verify your options. If your state doesn’t allow for two different people to function as titleholders and registrants, then your best option is to add another person to the title. That’s not an action to take lightly, as you will be transferring ownership, fully or partially, to that individual.

Have this strategy sorted out before you sign the financing agreement and title documents. Your lender would have to approve titling changes after the fact, and that will probably get messy.

Insuring a car without a license

If you’re buying the car from a dealership, you’ll have to show proof of insurance to secure your financing and take the car off the lot. The first thing to know is that no insurance company will insure that car with you listed as a covered driver. You will need to insure the car with someone else listed as the primary driver and you listed as an excluded driver. You won’t have any coverage if you get behind the wheel, but that shouldn’t matter — since you’re not going to drive the car anyway. Also, if the car is for personal use, this arrangement is much easier if you and the primary driver live at the same address.

A car you purchase for your business will need a business auto policy. In that case, the business is insured, and you’d list your licensed employees as drivers.⁵

Sort out the details before you buy

It is unconventional to buy a car without a license, but it can be done. Before you lock yourself into the purchase, ask your DMV about the registration and titling rules, choose a titling strategy, and shop around for a lender. If you organize those details early, you can walk into any car dealership feeling confident that you can make a deal.