As a newcomer to the US, you may face major hurdles when purchasing and financing a car. Here’s everything you need to know to get a car loan without a credit history or co-guarantor.
Moving to a new country can be scary and difficult for many reasons. Finding and securing housing, jobs, and transportation are just some of the biggest hurdles newcomers to the US can face.
Many immigrants are eager to purchase a car out of necessity or out of the convenience of having readily available transportation. Getting a car loan without a US credit history can be difficult for the reasons explained below. Regardless of your situation, there are a few things to consider when buying a car in the US. This guide walks you through every step of the car buying and car financing process.
Can Immigrants Who Have Never Had Credit in the United States Get a Car Loan?
As a new immigrant to the US, you can get a car loan if you have a visa or permanent resident card. You may find that you have several options for financing your car, including dealer loans, personal loans, and credit unions. There are different eligibility requirements for each type of loan, and some have eligibility requirements that are difficult to meet. In general, immigrants may find that they have to overcome several challenges in order to finance the purchase of a car.
Why It’s Difficult for New Immigrants to Get Loans in the United States?
Lenders consider a variety of factors when evaluating loan applications. One of the biggest factors is your credit score Which Can Help To proceed with your application. This is a numerical representation of your creditworthiness or your chances of repaying your loan on time. Newcomers to the US do not yet have the opportunity to join the national credit system and obtain a US-based credit score. This means you lack US-based credit history upon arrival. This means it’s difficult to get a car loan without a US credit history. For lenders, new entrants are riskier applicants compared to US consumers with established credit ratings. New entrants with visas present an additional risk that lenders must consider as visa status can change at any time. If not, the lender will not be able to recover the outstanding balance of the loan. These are some of the reasons immigrants are often denied credit. Some lenders have even gotten into legal trouble over blanket policies that refuse to lend to non-U.S. citizens.
However, there are several ways immigrants can obtain auto loans. One option for newcomers to the US struggling to secure funding is co-signatories. A co-signer is someone who has a strong and established credit history and who commits to assume a debt that cannot be repaid. The difficulty with this route is that recent immigrants are new to the country and may not have access to individuals who meet the co-signer requirements.
How Your Credit History Abroad Can Aid in Your Application for a Car Loan?
Until recently, new entrants to the United States were unable to obtain auto loans using their existing international credit ratings. Many immigrants had to start over because banks and credit bureaus were unable to adapt international lending to the U.S. model. Even those with great credit in their home country had to start from scratch, taking the time and effort to build a brand new US credit history. This is tedious work that takes up to five years.
Today, Nova Credit offers newcomers to the US an easy way to get credit cards and loans while building a good credit history. Nova Credit’s technology can connect to your international credit data and transform it to fit the US model. This gives you access to your international balances here in the US.
How to Finance a Car Using Your Global Credit History?
If you’re ready to buy a car but don’t know where to start, we can help. Below, we outline the steps and considerations for buying a car, including securing financing.
Get a license to drive?
If you are visiting the United States for the first time, you should strongly consider obtaining a license. Many states have state-specific licensing laws for undocumented citizens.
The advantage of a driver’s license is that it not only allows you to drive a car but also provides an official document containing important identifying information such as your name and address. Additionally, a driver’s license can help you get cheaper car insurance premiums, especially if you have a clean driving record.
Locate a Car?
Finding a car can be difficult if you are new to the US. There are many car dealerships and online car buying options, but be careful. When shopping from retailers, be aware of sales tactics designed to encourage purchases. Take some time to browse the vehicle and consider key features and metrics such as B. How many miles per gallon does the car run?
Another consideration is whether to buy a used or new car. A new car may have the latest features, but it can put a lot of strain on your wallet. Used cars are cheaper, but may require more maintenance to keep them running smoothly. Both options have advantages and disadvantages and should be considered in light of your unique situation and needs.
Bringing in a friend or family member who has experience buying a car can help you ask the right questions and gather the right information to make an informed decision. Beware of hidden fees and make sure you understand all the “additional” fees that come with buying a car, such as ownership and registration fees, license fees, and commissions. These add up to hundreds of dollars and can squeeze your budget.
Look into Auto Insurance?
Auto insurance is another thorny obstacle for newcomers to the US, as many insurers base their risk assessments on driving records and license status. This is where having a driver’s license helps.
Some businesses also require a social security number to purchase auto insurance, verify your identity, and complete credit checks. You may be able to get car insurance without a social security number, but you may need to pay a security deposit first.
When choosing the best insurance, make sure you get the minimum coverage you need. This may vary by state. Full comprehensive insurance for your vehicle is ideal if it fits your budget.
Options for Auto Financing for Newcomers to the U.S.A?
As mentioned earlier, there are several ways to finance a car in the US, including credit unions, personal loans, and dealer financing. Below is a summary of the pros and cons of each.
Unions of credit?
A credit union is a great option for finding competitive interest rates. However, they usually grant car loans only to members. Since credit unions are non-profit organizations and rely on members to pool their resources, membership is usually required to receive credit union loans. To become a Member, you may be required to open a checking or savings account. Credit unions typically serve a specific group or geographic location and have few physical branches. So check your membership eligibility requirements and make sure you can easily access the branch if needed.
Personal loans are flexible loans that can be used for a variety of purposes, such as buying a car. The advantage of personal loans is that interest rates can be lower than car loans, and personal loans can be obtained from a variety of lenders, including banks and online-only lenders. These flexible and affordable options are ideal for immigrants looking to purchase and finance a car. However, eligibility requirements vary by lender and can be a barrier.
Dealer financing is how most people in the United States finance new cars. According to Experian, 61% of his new car financing is through automakers or dealers. The advantage of direct financing through a dealer is that it is the easiest process as there is no need to engage a third party. However, dealer funding rates can be high, and these loans may have additional fees on top of the loan repayment amount.
Internationalstudent.com lists the documents you are likely to need to get a car loan, with or without credit history and co-signers. This information is useful to most lenders (including dealers).
As a non-U.S. citizen or resident, you need some common documents to apply for a personal loan. The lender you end up using will walk you through the process and see exactly what documents you’ll need, but in most cases, you’ll usually need:
A financial eligibility form containing information about your employment, living and financial situation
Letter from employer (if applicable)
Payment documents such as copies of utility bills, rent, and phone bills
Proof of domicile
How to get a personal car loan in the US with Nova Credit and Westlake Financial
Nova Credit makes it much easier to get a car loan without a credit history or co-guarantor.
Nova Credit partners with Westlake Financial. Westlake Financial is a technology-based financial company that specializes in acquiring and servicing premium to sub-prime automotive retail installment contracts. This partnership represents an opportunity for newcomers to the US to access the best auto loan deals in the industry.