Lendbuzz CEO Amitay Kalmar spoke with Bianca Chan at The Auto Finance Roadmap Podcast about why he and Dan Raviv started Lendbuzz, our non-traditional lending approach, and what’s next for Lendbuzz.
A car is a major purchase, possibly the largest one you have ever made. As you approach this process, it is important to know what to do and how to do it. Being an informed consumer will help you to get the best possible car at the best possible price. Here is our checklist, intended to help car buyers who are new to the US. It will help to guide you through the process of getting a car that is right for you.
First: Are you buying a new or a used car?
This is usually the first decision you will need to make. The answer to this question depends on your income and your credit. If you have a higher income and good credit, you may be able to buy a new car. But if you are on a tight budget, or your credit is not ideal, a used car may be the right choice for you. Once you have made the new vs. used decision, the buying path splits. Let’s start with buying a new car.
Buying a new car: all new cars are alike
If you are shopping for a new car, keep in mind that new cars of a given make and model are all identical, no matter which new-car dealer you choose to shop at. They are fresh off the assembly line, and have had no previous owners. This means that you can focus on getting the best deal from the best dealer, and wherever that is, you will be getting the exact same car.
Here are some new-car buying tips that will guide you through the process:
- Decide which type of car is right for you: Car, truck, or SUV? Small, medium or large? Mass market brand or luxury?
- Do your research online: Read the reviews, comparison tests, and reliability ratings.
- Pick a few finalists: Two or three choices are enough, and don’t get hooked on a specific vehicle yet.
- Test drive your finalists at local dealers: Take a through test drive on all the types of roads you will normally drive on. The car should be comfortable, easy to operate, and have enough power and features for your needs. Do not discuss prices or purchasing at this point.
- Decide which vehicle or two you prefer: Your test drive should help you narrow your selection down to one or two.
- Configure your chosen vehicle(s) and find current incentives: Use the manufacturer’s website to choose the trim level and options you want. This will tell you the MSRP, or retail sticker price of the vehicle(s). The site will also give you information on current cash offers and other incentives.
- Check the local market pricing: Car shopping sites like Kelley Blue Book, True Car, or Edmunds can tell you what other buyers have paid for the car(s) you are shopping for.
- Locate the car you want: Check the manufacturer’s and local dealers’ websites for vehicles in their inventories that match what you want.
- Check your credit, figure out the right payment, and get preapproved: Checking your credit score will give you a good idea of the interest rate you will get on your car loan. The better your credit, the lower your rate. Next, use a loan calculator to figure out the right loan term and payment for your budget. Then you can apply for a loan and get preapproved, before you enter the dealership. Even if you’re a new U.S. resident without credit, Lendbuzz can help you here – contact us!
- Negotiate the price of the car at several dealerships: Using the local market prices you have found, visit a few dealers that sell the brand(s) you are shopping for. If you don’t want to take the time to do this, you can do it by email or through the dealer’s website. Tell them that you are shopping for the best price on the exact car that you want. Also ask them for the interest rate that they would offer you for financing your purchase, and compare it to the rate you have been preapproved for. Continue negotiating until the car prices and the interest rates don’t get any lower.
- Take the best deal and close it: Select the best combination of car price and financing rate, visit the dealer, do the paperwork, and drive away. Remember to bring your driver’s license, proof of insurance, any funds needed for a down payment, and your preapproved loan information, if relevant.
- Drive away happy!
Buying a used car: no two used cars are alike
Once you enter the world of used cars, you will quickly realize that each one is unique and different from all of the others. They have been driven varying numbers of miles, they have had one or several owners, and they may have led lives that were pampered or abused, as well as everything in between. The key to buying a good used car is to find the one that has been treated the best, driven the least, and fits within your budget.
Here are some used-car buying tips to help you navigate this unfamiliar landscape:
- Decide on the type of car you need: Small, medium or large-sized? A car, an SUV, or a pickup truck? A luxury brand or something from the mass market?
- Research thoroughly online: Check out reviews, driving impressions, and especially reliability ratings and maintenance/repair costs.
- Narrow it down, but not too much: Remember, the condition, mileage, and previous care of a used car count for a lot. Keep your options open.
- Check the market pricing: Car shopping sites like Kelley Blue Book, True Car, or Edmunds can tell you what other buyers have paid for the used car(s) you are looking at.
- Look up your credit score, figure out the right payment, and get preapproved: Checking your credit score will give you a good idea of the interest rate you will get on your car loan. The better your credit, the lower your rate. Next, use a loan calculator to figure out the right loan term and payment for your budget. Then you can apply for a loan and get preapproved, before you enter the dealership. Lendbuzz can help you here – contact us!
- Thoroughly inspect and test drive each prospective used car: Check the condition of the interior, exterior, the under-hood area, and the tires. Take an exhaustive test drive on lots of different types of roads, including rough and bumpy ones, as well as highways. The car should feel solid, accelerate smoothly, corner confidently, stop quickly, and not make any disturbing noises. It should also not have any bad smells, severe rust, or other obvious problems. All of the basic systems and electrical/electronic accessories should work properly.
- When you have narrowed it down, have the car inspected by an independent mechanic: This will cost a few bucks (somewhere around $100), but it is an excellent investment. A thorough inspection by an independent third party will give you the real lowdown on whether this used car is worthy, or if it is about to become a money pit that you should steer clear of. If that’s the case, walk away and keep looking.
- Negotiate the price of the used car: Use the local market used-car prices you have found, along with any problems that the car may have, to negotiate a better price with the seller. You may ask the seller to make any necessary repairs as part of the deal. Otherwise, deduct the cost of the repairs (your inspection mechanic should give you this information) from the negotiated price. If you are buying the used car from a dealer, ask about a warranty. Also ask them for the interest rate that they would offer you for financing your purchase. Compare this to the rate you have been preapproved for.
- Close the deal: Using the lowest financing rate, do the paperwork. You will need to bring your proof of insurance, driver’s license, down payment, and preapproved loan documents.
- Drive away happy!
Refinancing your car loan can give you added financial flexibility and savings in several different ways. Here’s an overview of how refinancing works, whether it’s right for you, what it takes to qualify for refinancing, and how to get started refinancing your vehicle loan.
What are some mistakes to avoid when getting a car loan in the US?
Moving to the U.S. can be difficult and overwhelming, but getting a car loan doesn’t have to be. Buying a car is an important and, sometimes, lengthy process. So there’s room for mistakes. However, with careful planning and research, you can know which mistakes to avoid when getting a car loan in the US.
The process of getting a car loan can become more complicated for expats. So it’s important to be aware of these common car loan mistakes. Most of these occur before your loan gets financed. During the research, application, and negotiation processes.
It’s important to remember that getting a car in the United States involves more than visiting a dealership and getting a good price for a car.
Here are some of the most common mistakes when getting a car loan and how to avoid them.
1. Going to a car dealership without getting pre-approved for a loan
Many people visit a car dealership first without securing a car loan. This can lead to consumers choosing lenders that are near the dealership or recommended by the dealer. These lenders may be convenient. But they are not necessarily the best fit for internationals in the U.S.
If you choose a lender and get pre-approved for a car loan beforehand, your final visit to the dealership can be quicker and smoother. You’ll be more likely to stay within your budget, as you have already been approved for a loan amount. Also, you will have an advantage when negotiating your car’s price.
If you explore lenders before visiting a car dealership, you’ll have researched the price of your car and your loan options more carefully. This gives you time to compare quotes and rates. Therefore you will be better informed when making the final decision.
How do I get pre-approved for a car loan?
There are many factors that lenders, banks and dealerships will look at before considering you for a loan. These include your credit score, current income level, and current debt level. What if you don’t have any credit history in the U.S. yet? No problem! Lendbuzz is a specialized lender that provides car loans for internationals without credit history in the US. You can get pre-qualified online in minutes!
2. Neglecting online lenders
Even though choosing the dealership’s financing options may look convenient because you are already there, it is important to remember that you have more to choose from! You can consider getting a car loan with a bank, credit union or an online lender. Neglecting online lenders is a mistake because you are greatly limiting your options. Online lenders will provide you with quotes faster than banks will and the shopping experience is more flexible. So you can save time and money.
3. Not knowing in advance what you can afford to pay
Ask yourself: How much can I put as a down payment? How much can I spend every month on the car? What will all the costs associated with getting a car loan be? Answer these questions honestly and avoid putting yourself in an uncomfortable position every month when payments are due. Facing your financial situation beforehand will keep you focused on a number. That way will not be distracted by the countless confusing offers the dealers may present you with.
4. Paying higher interest rates than necessary
It is suggested that you do some research around your area and make sure you get the best interest rate possible in the current market. With that information in hand, you can make a smart choice when selecting the interest rate more convenient for you. Dealerships tend to overcharge their customers regarding APR or yearly interest rate. You should explore all your options and look for the deal that best suits your needs and your financial situation. A higher interest rate may lead you to overpay for your car loan in the long run. As an international in the U.S., you may find that lenders are wary of lack of financial history in the States. You may get offered interest rates higher than 20%! This is too high and there are better car loan options for internationals.
5. Selecting a long-term for your car loan
The longer your financing term is, the more money you’ll end up paying in interest. If you select a shorter of 2 to 3 years, your monthly payments may appear too high in comparison to a longer 5 to 6 year term. However, at the end of the loan term, you will be saving money in APR. It is advised that, if you can afford the monthly payments that come with a short financing loan term, you should pick the shortest term possible. You could save thousands of dollars in interest when making this choice.
6. Paying more than the car is worth
After you’ve done your research, you should know how much you can afford to pay for: the vehicle itself plus the car loan and its fees and interest rate. You should have also decided the length of your financing term. Stick to those numbers! Don’t let your emotions betray you when you’re about to finalize your car purchase. Car dealers may try to convince you into choosing a deal that will benefit their business but hurt your wallet. Learn to say no to unnecessary offers. This brings us to…
7. Agreeing to expensive and unnecessary add-ons
As mentioned before, the biggest mistakes are made in the financial office of the dealership. Dealers are great at their job and they may try to make you sign warranties and other services. These may look tempting at first but will add up to the cost of the car loan and the interest. In most cases, these add-ons can be purchased for a lot cheaper in other financial and insurance institutions. As always, look at your choices and think twice before signing any document they present you with.
We hope you are now aware of the common mistakes to avoid when getting a car loan in the US. You’re now ready to move closer to purchasing your dream car.
Common Myths and Misconceptions About Car Loans Debunked
Getting a car loan can be a lengthy process, but it doesn’t have to be a complicated one. As an international living in the US, you may have heard a few myths about getting a car loan. There are a few common car loan myths circling around. For expats, the process of financing a vehicle is a bit different from that of a U.S. Citizens. So it’s important to know what’s true and what’s not when it comes to getting a car loan. Let’s bust the most common car loan myths and get you on track to financing your vehicle!
Myth #1: You need a social security number to get a car loan.
Social Security Numbers are numerical identifiers used for all United States citizens. Nowadays, SSN are issued at birth. If you are a non-citizen residing in the United States you may or may not be eligible to apply for a Social Security Number.
For Americans, these 9-digit identifiers are extremely important. One major role of the SSN is the connection to a person’s credit history. This country runs on credit scores. Most loans require a credit check. Consequently, many loan applications require you to enter a Social Security Number.
An SSN cannot be obtained simply because you need a car loan. Fortunately, there are options for foreign nationals without Social Security Numbers to secure a car loan. Some lenders will collect other information from you, like recent pay stubs and bank statements. As a result, they can have an idea of how financially responsible you are.
So, is it possible to get a car loan without a Social Security Number?
First, simply ask yourself: what are my options? If an application requires an SSN, try contacting customer support and explaining your situation.
Second, you can find a lender who caters to foreign nationals or borrowers without social security numbers. Lenders who specialize in foreign national car loans, like Lendbuzz, already have procedures in place for borrowers without an SSN. This helps you simplify your application process and secure a car loan more easily if you are qualified.
Myth #2: You can’t get approved for a car loan without credit history or credit score.
Most lenders rely on your credit history to determine whether or not you would be a trustworthy borrower. They use your credit score as the primary indicator and your social security number to access that information.
Having a Social Security Number does not mean you automatically have credit history.
Lenders in the U.S. generally only consider credit history that occurred locally and was reported to the credit bureaus. This includes activity from credit cards, mortgage payments, and car loans.
Not having credit history is not the same as having bad credit. Having bad credit means you have missed payments or acted irresponsibly. Having no credit means you have no financial activity in your records yet. If you don’t have credit history because you haven’t engaged in financial activities in the US yet, you still have a shot at getting approved for an auto loan.
So what can you do if you don’t have credit history? Find a company who can look at other information besides your credit score. There are other ways to show you can be financially responsible. These include bills that you’ve paid on time, your income, and your savings.
Myth #3: You can only get a good interest rate on a car loan if you have a high credit score.
Contrary to popular belief, it is indeed possible to get a good interest rate on a car loan, even if you have no credit.
One way borrowers can improve their chances of a low interest rate offer is by using a cosigner. A cosigner acts as an insurance policy to the lender. If you fail to pay, they can demand payment from your cosigner.
Cosigners need to have good credit and be willing to take responsibility for your loan if necessary. As an international, you may not know enough people in the United States. Or you may not have such a close relationship with someone willing to be your cosigner. After all, a cosigner means lower interest rates for you but it can damage your cosigner’s credit if you fail to pay. It’s a lot to ask of someone.
An option for expats in the U.S. is to seek out a company that can offer competitive rates but does not require a co-signer. If a company has procedures in place to determine your trustworthiness without a credit score, then you are more likely to get a lower rate based on their policies.
Myth #4: All car loan lenders are the same.
Not all car loan servicers were created equal and it’s important to research the companies you are applying to. If you do this, you can secure the best rate and improve your chances of getting approved.
There are a few ways to decide which companies you should consider applying to:
Find a company whose mission suits your needs.
The Internet is your friend when it comes to choosing a car loan servicing company.
If you have special circumstances, like not having a social security number or a credit history, a quick web search can help you narrow down your options. Some lenders cater to bad credit and others to families. Many companies have their own niche of the market that they want to help.
Lendbuzz is an example of an auto loan servicer that caters specifically to internationals who may not have credit history in the US. By using other information about you, like your education, earning potential, and savings, they are able to provide car loans at fair interest rates to borrowers who may not qualify at other companies.
Identifying the companies that care about and understand your needs can help you save in the long run.
Find out other customers’ experiences.
Once you’ve decided on a few lenders, you’ll want to find out what others are saying about them. Browse Google, Facebook, and Yelp reviews to find out how good a company’s customer service is. Is there a common concern among customers that you should be wary about? How good are the company’s ratings?
Apply for multiple loans and compare for yourself.
If you’ve done your research, you’ve probably identified more than one company that would suit your needs.
Fortunately, the application process for a car loan is non-binding. This means that you can apply to multiple lenders in order to compare rates for yourself.
Myth #5: The monthly payment is the most important number
You may be tempted to focus on the monthly car payments to determine whether you can afford your loan or if you got a good deal. However, don’t forget to take into account the total cost of the car. This means taking into consideration the interest you will be charged and the price of the car. If you extend your loan, you will have lower monthly payments but overall price of the car will be higher.
Myth #6: You can only get approved by local lenders
You may think that part of the application process still has to be completed in-person but that is not true. There are lenders all over the United States who have 100% online financing processes. You don’t have to limit yourself to considering lenders based in your state. This opens your options to a variety of lenders.
Many car loan myths could be holding you back from purchasing a vehicle. Getting to the truth of common car loan myths is an important step in getting the car of your dreams.
College students looking to purchase a new car should consider more than the sticker price when budgeting for costs. The cost of purchasing a new or used vehicle goes beyond what you pay a dealer
or seller, and that doesn’t just refer to a car loan or car payments. Once you own a car, your budget will also account for other expenses such as insurance, gas and car maintenance. When considering various factors (like sticker price, fuel economy and maintenance) to get the best deal, it means that you want the best value. For this reason, we have created the The International’s Guide on Buying a Car in the U.S. to make sure you are looking at all factors and getting the best deal on your car!
Although some people think that wintertime in the North East is just for cuddling up and staying warm, there are plenty of adventures to be had throughout New England in the great outdoors!
Whether you love extreme sports, enjoy the changing scenery, or simply trying new indoor activities elsewhere, New England can offer you many types of winter experiences.
In this article, we will discuss the best winter activities for international students, particularly around New England. We will also discover different outdoor activities to try and tell you where to try them. Lastly, we will learn about preparing your car for the journey there.
If you have decided that it’s time for you to buy a used car, you may be overwhelmed with the process of going through a dealership. The negotiation process is enough to keep even the most courageous driver at home!
When dealership prices and antics aren’t getting you the used car you need, you still have another option – EVEN if you need to refinance your car.
It’s time to consider buying from a private seller.
For this reason, we are offering the Complete Internationals’ Guide to Buying a Used Car in the US, where you will learn about the process of buying a used car through a private seller, and how to refinance your car to get the best deal that works for you. At the end of the post, you will see an example from start to finish of the car buying process.
If you are an international student in the US finding yourself needing a car for the first time, you’ve probably heard of leasing. In this article, we will discuss how can international students buy or lease a car in the US.
To some, this is an attractive option to avoid cash flow issues, and spend less total money in the short term, all while driving a new vehicle you may not otherwise be able to afford. However, when you lease a car you lose out on several benefits of car ownership. When you lease a car, you are renting it with limited restrictions. For example, limits on mileage, strict interior and exterior maintenance, and a contract term that can incur penalty fees if broken.
Not only that, but many foreigners living in the US—particularly international students—will be hard pressed to secure a car lease without credit. This is a unique challenge that international students on F1 visas must face. In many cases, international students are not eligible to lease a car.
Buying a car is an important step, and one that requires much consideration. There are many aspects you’ll want to consider before purchasing a new or used vehicle, but a major piece of the car buying puzzle is deciding whether to pay cash upfront, or to finance your new ride.
So, how do you choose?
Well, there’s no one right answer for everyone. But if you are a foreign national in the United States and need a car, there are a few factors that you should consider before making a decision. Learn more about your options in this Car Payment Guide for Internationals article.
What’s the difference between paying cash and financing?
You have two options when you purchase a car through a dealer.
- Option 1: Pay cash, and leave the dealership with full ownership of your car. You have paid the price tag (or negotiated) amount in full. This means if you had $30,000 in your bank account and purchased a $25,000 vehicle, you now have $5,000 left in the bank, and a new car in your parking spot.
- Option 2: Finance. When you finance your new or used vehicle, you only pay cash for the down payment, a percentage of the total cost of the car. The remainder of the cost is broken down into monthly payments, with added interest. You have an auto loan.
Now, you may be thinking that by choosing to finance your car your total cost goes up due to the added interest of the course of your loan. If you have the money in the bank to cover the price tag, what’s the point of adding interest into the mix? Shouldn’t you try to save as much money as possible, to get the best deal?