Q. Can we do loans for people under 18?  I have never heard of it but apparently the credit union has made loans for members under 18 in the past.

A. Great Question! 

There are no prohibitions regarding making a loan to a minor, however, in Utah the contract will be unenforceable until the applicant reaches age 18 (if you make loans in other states you should check those states’ laws). It would be inappropriate to start collection actions, repossessions or report negative credit on an applicant that does not have a legal contract with you.

Because of that, it is strongly recommend that if you lend to a minor you require a co-applicant that is an adult.  Not a guarantor or co-signer -make the adult a co-applicant. Reg B prohibits requiring a certain person (parent, spouse for example) be a co-applicant.  However, you can require a co-applicant qualify for credit union membership and have a meaningful relationship with the primary applicant.

Credit cards have special rules for young borrowers.  With credit cards any applicants under age 21 must demonstrate an independent ability to repay debt (meaning the minimum payment due on a fully advanced line).  Otherwise, they must have an adult co-applicant that can demonstrate an ability to pay.