Getting a car in the US is quite a hustle, especially if you are a foreigner living or working on a visa card. Comprehension of the process of getting car loans enables one to take into advantage the many avenues available in acquiring auto loans. As much as immigrants may lack credits score good, bad, or its non-existence and Social Security Numbers, they can still be eligible for car loans. Here are five crucial steps to consider when applying for auto loans.
LOAN ELIGIBILITY AND LENDER
Banks across the US require creditors to identify themselves via a Social Security Number to get a loan. However, you can acquire a loan through the application of an Individual Taxpayer Identification Number (ITIN). ITIN is an identification number used to account for the annual tax return for all working individuals by the Internal Revenue Service (IRS) in the United States. Your next task would be to identify a bank or financial institution that recognizes an ITIN.
You should consider credit unions and local banks that provide financial services to minority groups, including immigrants. You can still acquire loans without cosigner or credit scores through dealerships and online lenders. However, online lenders have poor customer services and reliability, while dealerships are profit-oriented and have high-interest rates. Therefore, you should build a good credit score or get a family cosigner.
You can watch your credit score by writing letters to Equifax, Experian, and TransUnion. Maintaining a good credit score will increase your eligibility for a car loan. You should also ensure that the financial institution that gives you credit reports to the bureaus concerned with credit to build your credit history.
ASSES INTEREST RATES
You should always pick loans with interest rates that are the lowest. You should, therefore, research various lenders, and contrast their rates. Additionally, interest rates are characteristic of your lender, financial status, and economic status. Picking an auto loan with the best quality requires you to identify the lender with both low rates and terms.
CAR LOAN TERMS
It would be best if you considered the car loan term. Your term describes how long it will take to pay off the loan. Loans terms go hand in hand with interest rates since longer terms draw higher interest with higher amounts paid and vice versa. Therefore, you should choose a loan term that fits your financial plan while paying for the smallest amount over the loan term.
STATUS OF CAR
You will have to consider whether to buy a used or new car. New cars are expensive or costly as compared to used cars and hence, require you to have higher loan eligibility. However, lenders provide new vehicles with lower rates of credit interest. New cars are under warranty with fewer occurrences of breakdowns.
Used vehicles have lower prices with higher interest rates. The interest rates are subject to the mileage and condition of the car. Used cars are more prone to maintenance issues with the absence of the manufacturer’s warranty. Therefore, you should pick a car that resonates with your budget, desired interest rates, and lender; for instance, credit unions offer loans for purchasing older cars.
PREDICT AFFORDABILITY AND ESTIMATE TOTAL COST
Before taking any loans, including car loans, you should calculate the total cost of the auto loan. Do not take your loan based on only low monthly payments or small interests. However, it would be best if you used a combination of the two and the period of monthly fees to have a global view. Low monthly payouts over long periods translate to higher rates and higher total amounts paid for in the end.
You should ensure that the monthly payouts are affordable. It would help if you struck out a balance between low installments with interest rates that are lower in the end. Do not pick short periods of payment that call for you to pay high, unaffordable monthly installments.