Car Loan for New Immigrants U.S.

Updated on April 9, 2024

At a Glance

  • New immigrants in the US can secure car loans with a permanent resident card or visa, potentially requiring a down payment.
  • Lenders may perceive immigrants as higher-risk due to limited credit history and potential visa status changes.
  • Car loan options include dealership financing, credit unions, or personal loans.
  • Stilt, an online lender, offers personal loans tailored for immigrants, considering factors like education and income rather than solely relying on credit scores.

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.

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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.

Frequently Asked Questions (FAQ)

Can New Immigrants in the U.S. Get Car Loans?

Yes, new immigrants in the U.S. can get car loans. However, they may face certain challenges such as establishing credit history and providing proof of income and employment.

What are the Requirements for New Immigrants to Obtain a Car Loan in the U.S.?

Requirements typically include a valid visa, proof of income or employment, a U.S. bank account, a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN), and proof of residence.

Do New Immigrants Need a U.S. Credit History for a Car Loan?

While having a U.S. credit history is beneficial, some lenders specialize in offering car loans to immigrants without a U.S. credit history. They may assess other factors like employment stability and income.

Can New Immigrants Get a Car Loan Without a Cosigner?

Yes, it’s possible for new immigrants to get a car loan without a cosigner, but having a cosigner can improve the chances of approval and potentially secure better loan terms.

Are Interest Rates Higher for New Immigrants?

Interest rates for new immigrants might be higher compared to established residents, due to the perceived higher risk by lenders. Rates can vary widely between lenders.

What Types of Documentation Do New Immigrants Need for a Car Loan?

Documentation needed typically includes immigration documents, proof of income or employment, bank statements, an SSN or ITIN, and proof of residence in the U.S.

How Can New Immigrants Establish Credit for a Car Loan?

New immigrants can establish credit by obtaining a secured credit card, being added as an authorized user on a credit card, or getting small credit-builder loans or lines of credit.

What Should New Immigrants Consider When Shopping for a Car Loan?

New immigrants should consider interest rates, loan terms, any additional fees, the total cost of the loan, and the credibility of the lender.

Can New Immigrants Use an International Driver’s License to Get a Car Loan?

While an international driver’s license can be used for driving purposes, lenders usually require a U.S. driver’s license or identification for a car loan application.

How Long Does It Take for a New Immigrant to Get Approved for a Car Loan?

The approval time can vary but typically takes a few days to a week, depending on the lender’s process and the borrower’s promptness in providing necessary documents.

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