Car Loan for New Immigrants U.S.

One of the most important purchases that any immigrant in the US will make is buying a car. Cars are a necessity for most immigrants since everyone needs a way to get to work or bring home groceries. However, few people have enough funds to cover the cost of a car upfront, and getting a car loan can be difficult as a new immigrant.

We put together this article as a resource to help new immigrants in the US find a car loan. Learn about the loan options available and how to get the best rates.

Can Immigrants New to the U.S. Get a Car Loan?

Yes, new immigrants in the US can get a car loan. As long as you have either a permanent resident card or a visa, then you are eligible for a car loan (though the loan may require a down payment). There are a number of potential options which we will explore later, including dealership financing, credit unions, or a personal loan. Eligibility for these loans will vary, and some are more difficult to obtain than others. Immigrants in general also have a difficult time getting loans, read on to find out why.

Why It’s Hard for New Immigrants to Get Loans in the U.S.

When lenders assess loan applications they look at a few specific factors, and perhaps the most important is credit score. Credit score gives lenders a record of how reliable you are in repaying loans, making payments, and staying fiscally solvent. But new immigrants to the US (for instance, international students) have not used US credit cards or participated in the US credit system, so they typically have no credit history at all when they arrive in the US.

Without a credit score to reference, lenders typically deem immigrants higher-risk than other applicants, and deny them loans accordingly. There are other factors working against immigrants as well. The visa status of immigrants can change at any time. That means that immigrants may be forced to leave the country, in which case lenders would not be able to recover the loan.

Another challenge that immigrants face is that car loans often require a cosigner. A cosigner is someone with strong finances who will take over the debt if you are unable to repay. But since new immigrants typically do not have a lot of friends and family in the US, they often cannot find a cosigner.

Loan Options for New Immigrants in the U.S.

You can either get your car financed by the dealership that you buy the car from, or from a financial institution like a credit union, bank, or online lender. There are pros and cons to each of these options, we break them down in detail in the following section.

Dealership Financing

Dealership financing is when you get a car loan directly from the dealer. Getting your car loan directly from the dealer is perhaps the simplest way to finance your car, since you don’t have to apply to a third-party for the loan. However, there are some major downsides to dealership financing.

The main one is that the rates on loans from dealership financing are typically much worse than regular personal loans. Also, dealerships often take fees from dealership financing, which means you’re paying extra on top of the loan amount.

Credit Unions

Another common source of car loans are credit unions. Credit unions are nonprofit organizations in which members pool their resources and offer loans to other members. Credit unions often offer competitive interest rates, but the drawback is that you must be a member to join. Joining a credit union typically involves opening a savings account. Also, credit unions typically only service certain areas and have few physical branches that you can visit.

Personal Loans

Personal loans can be put towards any purpose that you want, including a car. Rates on personal loans are often lower than auto loans, and you can obtain a personal loan either from a bank or an online lender. The flexibility and affordable rates of personal loans make them a solid choice for immigrants.

How to Get a Personal Loan for a Car in the U.S. with Stilt

Stilt is an online lender based in San Francisco, California, that offers financial services specifically to the immigrant community. Immigrants often don’t have the credit score to get a loan from one of the big banks, or don’t have a cosigner. As a result, intentionally or not, immigrants are discriminated against in the loan market.

Rather than judging based on criteria that disqualifies you, Stilt has developed a criteria that is inclusive of immigrants. Stilt looks beyond credit score and assesses applicants based on criteria like education, employment history, and income. Here’s how the loan process with Stilt works:

• 1. Complete an application: this takes only a couple of minutes, and involves authorizing a soft credit check and submitting some personal financial information.
• 2. Get a decision: Stilt will respond within 24 hours. If your application is accepted you will qualify for an interest rate, along with a range of term lengths and loan amounts.
• 3. Receive the funds and start making payments: once you agree to a loan amount and term length, the funds will be deposited in your account and you can begin making payments.

Read More

• Getting a Car Loan Without Credit History
• Car Financing With a New Job
• How to Remove a Cosigner from a Car Loan
• How to Get an Auto Loan Without an SSN
• Auto Loans For Non U.S. Citizens
• Personal Loans as Auto Loan Down Payments

Conclusion

New immigrants in the US usually have a million different things to worry about, and a car is just one of them. Dealership financing is tempting for many because it’s easy to obtain, but you may end up paying thousands of dollars extra versus the rates you would get from a personal loan. The best practice is to shop around for loans at a few different lenders, both online lenders, and banks. Find out their eligibility criteria and see if you qualify. If you do, then get a quote, and compare the quotes until you find the best one.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

See author's posts