How to increase your chances of approval when you don’t have a green card.
Getting around the US without a car can be difficult, especially if you’re not living in a major city. The good news is that some lenders are willing to offer car loans to nonresidents. However, you may be subject to more stringent eligibility requirements than other borrowers.
How do car loans for nonresidents work?
Car loans for nonresidents are essentially the same as any other car loan, except that fewer lenders offer them and you may need to meet additional eligibility requirements.
In general, you borrow money needed to purchase a car from a bank, credit union or online lender and enter into a contract to make monthly repayments over a set number of years. The loan is backed by the car you’re purchasing, which means the lender can repossess your car should you default.
As a nonresident, however, you may be subject to additional eligibility criteria and stricter terms. Keep these factors in mind when looking for a car loan:
- Loan term. Most car loan providers offer terms from one to seven years. However, you likely won’t be offered a loan term that extends past three months before your visa expires. Most lenders only consider your current visa and won’t rely on pending visa applications or extensions — no matter how likely their success.
- Visa type. Some lenders will only extend credit to nonresidents holding certain types of visas. Borrowers with student visas and H1-B visas with a path to permanent residency will likely have a greater chance of success than someone on a provisional or seasonal work visa. If your visa has been sponsored by an employer, this will greatly improve your chances of success.
- Credit history. As a nonresident, you likely have little or no credit history in the US. Since lenders won’t consider your overseas credit history, they may place more emphasis on your down payment, income and employment status to help determine your ability to repay a loan.
- Visa breaches. Many visas have strict limitations on the number of jobs you can hold or hours you can work in a week. While it’s important to maximize your income before applying for a car loan, lenders likely won’t extend you credit if your visa’s in breach.
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How do I know if I’m eligible for a car loan?
As with all car loans, eligibility criteria vary by lender and may include minimum income and credit requirements. However, not all lenders are willing to work with nonresidents. And those that do may require you to hold a certain visa to qualify. Additionally, lenders may have different requirements regarding how long you’ve been in the US, how long you intend to stay and your employment status.
How can I increase my chances of approval?
Car loans for nonresidents are considered a high-risk endeavor for lenders. Aside from meeting the eligibility requirements, here are some tips to improve your chances of approval:
- Make a cash down payment. The greater the down payment you can offer, the greater your chances of success.
- Build up your savings. If you can prove that your down payment is the result of your savings efforts while working in the US, this will show lenders you’re serious about applying and can effectively manage your finances.
- Increase your income. Earning an annual income of at least $50,000 will make you a more favorable borrower.
- Prove your employment is stable. Lenders need to be satisfied that your employment is stable and your income is regular. A lower, steady income can be more favorable than intermittent or seasonal income — even if the latter is higher.
- Apply with a cosigner. If you have a friend or family member that’s a US citizen and willing to cosign your loan, you’ll have an easier time finding a lender. Just make sure you only borrow what you can afford to pay back — your cosigner’s on the hook for repayments should you default.
- Open a US bank account. Most lenders want to see that you have a US bank account that you use to deposit your paychecks on a regular basis. Be prepared to provide bank statements for at least the last three months.
How do I submit my application?
Many lenders allow applications for car loans to be completed online, making it a simple and easy process. On the other hand, since there are more stringent requirements for nonresidents, an online application isn’t always the best idea. If you’re working to build your credit in the US and want to apply online, call and ask the lender if they’re willing to lend to nonresidents before submitting an application. Your score drops a bit each time a lender checks your credit, so you’re better off not applying to lenders you don’t have a chance with.
Lenders do have a certain amount of leeway when it comes to deciding whether to extend credit to nonresidents. For this reason, an in-person appointment can give you the opportunity to state your case and show that you’re a good candidate — something that’s not possible with an online application. Do the groundwork first to work out which lender could be the best choice based on your circumstances. Then, make an appointment to speak with a car loan officer at your chosen bank or credit union.
Getting a car loan as a nonresident can be difficult, but it is possible. Take the time to call banks, credit unions and online lenders before applying to make sure they’re willing to work with you. And increase your chances of approval by saving up for a down payment or applying with a cosigner.
To learn more about how car loans work and compare lenders, check out our guide.
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