H1B or L visa is a work visa and can be extended indefinitely by your employer. You are semi-permanent in USA in the sense that you can stay and work until the visa extension is denied.
If you can manage without a car, which usually is not the case in USA, it is advisable to wait for about 4-5 months and build a good credit history. Good credit history helps you get a car loan at a lower interest rate which is commonly known as APR in USA.
Most newcomers opt for buying a used car which I do not recommend due to its high maintenance cost and non-reliability.
Remember that Car insurance in US is charged on per month basis and can cost from $40 for just liability to up-to $200 for comprehensive coverage for newcomers to USA.
Buy New or Used Car?
Buying a new or old car decision varies by person to person but in my opinion, it is always beneficial to buy a new one if your stay is going to be longer than 13 months.
My opinion may sound contradictory to what you would normally hear from your peers when you land here in USA for the first time.
Most would almost always advise you to go for a used car within the budget of about USD 4-5K and save money. The primary reason behind this is ‘No credit’ history.
I would advise you to buy a new car. You can certainly get Auto loan and that too within an hour with no credit history.
Can Temporary H1B and L1 workers get Car Loan?
Any temporary worker in US on H1B or L visa can get car loan.
If you are new to USA, your credit history would be zero. They would still give out a loan to you but possibly with a higher interest rate. You should know whom to contact and how to negotiate on car deals.
Credit Union vs National Banks
You may face credit denials from conventional national banks like ‘Bank Of America’ or ‘Chase’. They also do not give out car loans for a tenure more than your H1B Visa’s validity.
My suggestion is to contact local ‘Credit Unions’ as they are flexible in their lending policies. They are nothing but small financial institutions who are more state centered than the national market.
I know many people who got 5 year car loan financed from ‘Digital Credit Union‘ in MA within an hour and that too with H1B visa validity of only 3 years. Similar credit Union banks operate in each state like California has CCU and Texans Credit Union for Texas residents. Do search for one in your state.
Car Manufacturer Finance Deals
Honda, Toyota and Nissan are the favorite brands due to their good resale value, engine reliability and better mileage. Keeping in mind the high demand for their family vehicles, these companies have also started 0% APR (zero percent interest) car loan offers if you get finance from their own sister companies.
Honda finance will lease or sell any of their car from Civic to CRV for 0% if you opt for Honda Financing.
Similarly, Toyota will be happy to sell you their best selling Camry at no interest cost to you.
I have seen more aggressive auto finance offers from Nissan though as they are trying to compete for your business with market leaders Honda and Toyota.
Lease vs Buy
I strongly suggest to buy the car even if you have to use bank finance than leasing. If you are not an expert in negotiations or do not understand the leasing tricks, you will almost always pay more for the car in lease than buying.
They will always try to sell you a lease deal by showing lower monthly payment as compared to finance, but, mark my words that you will pay more for same car at the end of lease than finance.
Cost Benefit Analysis of New Vs Old Car
We assume the car to be a Honda Accord or its equivalent like Toyota Camry in this example.
|Starting Mileage||10 miles||100,000 miles|
|Peace Of Mind||99.9% sure – No break-down in 100,000 miles.||99.9% sure – OLD car can break down anytime after 100,000 miles. Break down in USA even once can dent your pocket with about $800 in towing charges.|
|Gas Mileage||35/ gallon||30/ gallon|
|Un-Accounted Maintenance||Assume zero.||Assume about $150-200/ month.|
Do not make the mistake of assuming there would be no maintenance on used Honda or Toyota cars.
Every used car needs maintenance. It depends on your luck on how big a hole it digs in your pocket.
US Car loan helps build your credit history.
You can get an Auto loan from the car dealer or a credit union easily even if you do not have a credit history. Remember that any kind of credit helps you build your history.
The only difference is that if you have at-least 4-5 months of history, you can get a lower APR (interest rate) deal on the annual percent rates. Else, you might have to pay a little higher.
Example H1B case
H1B lands in USA with 9 months left on the approved 1 year. Used city’s average public bus transport (and no train) to commute to office or used to take help from fellow workers.
The grocery stores were at walking distance. The idea is simple to buy some time and build a fair credit history. Meanwhile, apply for H1B extension get a longer validity.
After 9 months, with visa extension of 3 years, applied car loan with credit union DCU.org and credit history rating of 678.
The loan was quickly approved by credit union even when it was denied by Chase bank and Honda Finance (from the dealer) before contacting DCU.