H1B visa buy car while my visa is not permanent here?
The answer depends a lot on your office, residential location and availability of public transport.
If you can manage without a car (which usually is not the case in USA) using public transport, it is advisable to wait for about 4-5 months and build a credit history.
Good credit history helps you get a car loan at a lower interest rate (called APR in USA). Else, you can buy an used car (which I do not recommend due to its high maintenance cost and non-reliability).
Should You Buy a New Car or A Used Car?
This decision largely depends on 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.
It may be a 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 4-5K dollars and save money. The primary reason behind this is ‘No credit’ history.
Also, what if you have to leave the country?
I would advise you to buy a new car. You can certainly get loans. Read on to find how.
Can Temporary H1B and L1 workers get Car Loan?
Yes, they can. I have got one for buying a Honda car myself and can certainly vouch for it.
You may face a bit of issue with the conventional national bank like ‘Bank Of America’ Or ‘Chase’. They normally do NOT issue 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.
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.
If you are new to USA, your history would be zero. They would still give out a loan to you but with a higher interest rate.
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.
Does taking Car Loan helps build credit history?
Yes, it does.
You can get a car 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 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.
If you have any more questions regarding buying a car on H1B visa or L1 work visa, do share them in the comments and I would love to answer to the best of my knowledge.