International Students: Getting A Car Loan Made Simple

As an international student, you may need a car, especially if you don't live in a big city with good public transportation. However, getting approved for a car loan as an international student is more complex than for a local student. While some lenders will not lend to non-citizens, there are companies that offer loans to international students, and some that specifically cater to this demographic. These companies may take into account academic information such as your GPA and enrolment status, as well as financial and personal information. Some lenders may require a co-signer, and this person's credit score may be checked. It's important to do your research and understand the costs associated with borrowing before applying for a car loan.

Characteristics and Values Table for International Students Getting a Car Loan

Lender options for international students

International students can get car loans in the US, but the process is more complex than for local students. There are several lender options available, and the right choice depends on the student's circumstances.

Traditional Banks and Credit Unions

Traditional banks and credit unions are reliable sources of car loans. Some institutions may have special programs for international students, simplifying the application process. However, many banks will not offer auto loans to non-US citizens.

Dealership Financing

Certain car dealerships offer in-house financing options designed for international students. While this can be convenient, it is important to carefully review the terms and conditions, interest rates, and any additional costs associated with dealership financing.

Online Lenders

Numerous online lenders cater specifically to international students, providing accessible and user-friendly financing solutions. Online resources can be used to compare loan terms, interest rates, and eligibility criteria for alternative financing options.

Expat Car Financing, Leasing, and Purchasing Companies

Working with an expat car financing, leasing, and purchasing company can make it easier and less expensive to get an auto loan. These companies specialize in helping expats and international students get vehicles without a US credit or driving history. They often have partnerships with manufacturers, offering special pricing and flexible financing options.

Companies Specializing in Non-US Citizens

Companies like Stilt help non-US citizens acquire low-interest-rate loans. They recognize the challenges of getting a loan without a credit score and can automate much of the loan or loan refinance process for international students.

The role of credit history and cosigners

As an international student, you may not have a credit history or social security number. However, some lenders may still check your credit file for any negative remarks such as bankruptcy or debts in collections. Some lenders specialize in working with individuals with limited or no credit history.

Having a co-signer, such as a US citizen or permanent resident with a good credit history, can significantly improve your chances of getting a car loan as an international student. A co-signer agrees to take responsibility for the loan if you fail to make payments. This reduces the risk for the lender and can lead to more favorable loan terms. It is important to note that your co-signer's credit will be impacted if you miss monthly payments.

To build a credit history in the US, international students can apply for a secured credit card, use a credit-builder loan, or consistently pay bills on time.

When considering a car loan as an international student, it is essential to understand the terms and conditions, including interest rates, repayment schedules, and any associated fees. Consulting with a financial advisor or the international student office at your university can provide valuable guidance.

Visa status and its impact on loan approval

Visa status can play a crucial role in the approval of a car loan for international students. While some lenders in the US may not provide loans to non-US citizens, there are still several options available for international students seeking auto loans.

Firstly, it is important to note that some lenders may have specific requirements or restrictions for international students. Thus, it is advisable to compare loan offers from different financial institutions. Some companies, like Westbon Inc., specialize in providing auto loans to international students and professionals. Additionally, some lenders may be willing to overlook visa status if other factors are favourable, such as having a stable income, good credit history, and a co-signer.

The type of visa can also impact loan approval. Acceptable visas for auto loans in the US include F-1, H-1B, L-1, J-1, O-1, and TN, among others. However, the loan term may not exceed the visa's validity, and some lenders may require proof of income, residence, and employment. For example, Toyota offers financing without considering visa length, while BMW will not lend beyond the visa expiry date.

International students with no credit history may still be able to obtain a car loan, but it can be more challenging. Lenders may consider other factors, such as visa status, income, and the availability of a co-signer. A co-signer is someone who agrees to take responsibility for the loan if the borrower fails to make payments, and having a co-signer can significantly improve the chances of loan approval.

In summary, while visa status can impact the approval of a car loan for international students, there are options available. International students should compare loan offers from different lenders, as some specialize in providing loans to this demographic and may be more accommodating of visa-related concerns. Additionally, factors like income, credit history, and the presence of a co-signer can also influence the likelihood of loan approval.

Documentation required for loan applications

As an international student in the US, you will likely need a visa, proof of income, and a US bank account to apply for a car loan. The documentation you'll need may vary depending on the state and the institution, so it's a good idea to collect as many of the common documents as possible. Here is a list of documents you may need to provide:

• Visa: This is the most common and accepted form of identification for international students. Acceptable visas include F-1, H-1B, L-1, J-1, O-1, and TN, among others. Your lender will want to verify how long you intend to stay in the US, so they may ask for your passport and other personal information as well.
• Proof of income: Lenders will need to see documents that verify your employment and income, such as pay stubs, employment contracts, or letters from your employer confirming your salary, benefits, and terms of employment.
• Finance qualification form: This form provides information about your employment, living arrangements, and financial situation. It helps lenders assess the risk of giving you a loan.
• Payment documents: These documents show your monthly costs for tuition, rent, utilities, and other expenses. They are essential for determining an affordable loan amount and repayment plan.
• Proof of residence: You will need to provide documents that verify your current address and legal residence in the US, such as utility bills, rental agreements, or official mail.
• Driver's license: You may need a driver's license or a driver's license application, which requires specific documentation, including Form DS 2019, Form I-94, and state-specific documents.
• Auto insurance: Auto insurance is mandatory in some countries, and having a pre-approved auto loan or the ability to obtain one is essential.
• Credit history: While not always required, having a US credit history can improve your chances of getting a loan. If you don't have a credit history, some lenders may offer alternative options, such as a co-signer with good credit history.
• Down payment: International students should be prepared to make a down payment when applying for a car loan.
• Enrollment status: Lenders may require official documentation confirming your enrollment status in a US educational institution, such as an acceptance letter or enrollment certificate.
• Other documents: Depending on your specific situation, you may also need to provide additional documents, such as medical and life insurance papers, scholarship award letters, or letters from sponsors.

Alternative options to car ownership

If you're looking for alternatives to car ownership, there are plenty of options to choose from. Here are some detailed explanations of each option:

Public Transportation

If you live in a city with a robust public transportation system, such as New York, Philadelphia, or San Francisco, getting around without a car can be relatively easy. Planning your trips according to the schedules of buses, trains, or subways can make your daily commute convenient and cost-effective.

Walking

For those living in downtown or busy city areas, walking can be a great way to get around inexpensively. It's a healthy and environmentally friendly alternative to driving, as it helps you burn calories and stay in shape.

Bicycle-Sharing and Renting Services

Cities like San Francisco and San Diego offer bike-sharing and renting services, providing an affordable and flexible way to get around. For as little as $1 per day, you can take advantage of these services and enjoy the benefits of cycling.

Car-Sharing Services

Car-sharing programs, such as peer-to-peer car-sharing, provide access to vehicles without the need for long-term ownership. These services offer various insurance packages, and some even include comprehensive coverage for damages, medical expenses, and uninsured/underinsured motorist protection.

Car-Subscription Services

Car-subscription services give users access to vehicles from well-known car manufacturers or third-party providers in exchange for a monthly fee. This option is appealing to those who want to drive different cars regularly without the commitment of leasing or buying. Some companies bundle insurance, maintenance, and other perks into a single monthly payment.

Carpooling

Carpooling services, such as those offered by Enterprise, or carpool apps like Carma and Waze, allow you to share the cost of a ride with your neighbors or colleagues. These services can be subsidized or even completely covered by your workplace if enough employees participate.

Online Shopping

With the convenience of online shopping, you can order almost anything you need, from groceries to household supplies, without having to drive to the store. This reduces the need for frequent car trips and saves you time and money.

Frequently asked questions