Leasing a Car for a Teenager: Options & Considerations

Leasing a car offers the safety of a new vehicle with lower monthly payments than for a typical car purchase, which seems like a practical option for teenagers. In practice, though, it can be tricky for a teen to lease a car. Most car-leasing companies won't lease cars to minors, which means an adult must lease the car on the teen's behalf or co-sign on the lease. Here's what you should know about options leasing a car for a teenager as well as the issues you might encounter.

Teenagers and Lease Contracts

In general, teens can't lease cars on their own. Car-leasing companies are unlikely to lease a car to anyone under 18 because of contract restrictions for minors. With few exceptions, minors don't have the legal ability to enter into a contract. This means that any contract, such as a car lease, can be voided by the minor, which is not a risk the leasing company wants to take on.

Each state sets its own age of maturity, which is the age at which a person can legally enter into a contract. For most states, that's age 18, but it varies. In Nebraska for example, it's 19. In Mississippi, it's 21.

Issues for 18- and 19-Year-Olds

At 18 or 19, older teens meet the age of maturity requirements in most states, which means they are usually able to legally lease a car. Leasing a car for a teenager at these ages can still be a challenge, though.

Just like they do for other applicants, leasing companies evaluate an adult teen's income, monthly obligations and credit score before approving the application. A score of ​700 or above​ is ideal for a lease. Most teens haven't had time to build up a great credit score yet, which means they'll have to pay high interest rates on the lease or may not get approved at all.

Leasing a Car for a Teenager

Teenagers can still get access to a leased car if an adult co-signs on the lease or leases the car on the teen's behalf. Some lease agreements do allow a co-lessee option, and a leasing company might approve an application with one minor lessee and one adult lessee.

Adult teenagers can benefit from this arrangement too. Adding a co-signer who has a strong credit history, a stable income and minimal debts can help a teen qualify for a larger lease obligation at a more competitive interest rate.

Alternatively, the adult can be the sole applicant for the lease. The teen's name may not be on the lease agreement, but as long as he is listed and covered by the adult's auto insurance policy, he can still drive the leased vehicle.

Implications of Co-Signing

Co-signing or taking on a lease on behalf of a teenager is a big deal. Anyone on the lease agreement is completely liable for what happens with the leased vehicle. Co-lessees are treated as equal owners and are liable for negligent operation of the vehicle, regardless of who's driving it. The co-lessee is also on the hook financially if the teen doesn't make the lease payments or returns the leased car in subpar condition.