Mobility finance
The answer, in short, is yes! Once a young person reaches the legal driving age, it can be a very exciting time for everyone involved. There is a new driver in the house and well your personal vehicle may not be the best drive for them. You may be in the market for a vehicle for them. If you are wanting to finance a car for them, you really only have two options.
Related: What is the cheapest car for a new driver?
You can take out the finance yourself or have them as a co-signer. We take a look at both so that you can decide which is best for you.
Personal finance
The first option you have is to take out the finance yourself. In this scenario, you will own the car outright and be the legal owner as per the registration documents. The downside here is that your child will not benefit from the agreement as it does nothing for their credit profile. The upside is that they do not have to be employed for you to get said finance as you are the official owner. This arrangement works in the situation where you are simply adding another car to your household and they are merely driving the vehicle. Just make sure the insurance is properly in place!
Co-Sign
The second option is a guarantor arrangement. Here both you and your child will jointly apply for the finance with you taking on the responsibility of ensuring that the payments are made. Your child is named as the registered owner and will need to show proof of employment for the finance agreement. The upside here is that this immediately begins to build your child's credit rating, and they benefit from your score, and they are the official owner of the car, the downside, of course, is if they miss a payment you are held responsible for the repayment amount, and it will in turn damage your credit score.
We strongly advise that you have good insurance in place, where you can name your child as the driver, premiums will be a little higher for younger drivers but that can be expected in the first few years.
