What are the Benefits and Downsides of Buying a Car?
This is part of our mini series helping international students understand every aspect of having a car in the United States as they pursue their studies. For information regarding international student auto loans, please follow this link.
If you are an international student studying abroad in the United States, you may have noticed how common cars are among the population. As of 2015, there was an estimated 263.6 million registered cars in the United States. It can be easily assumed that that number has since risen. Many other countries rely on other methods of transportation, such as public transport or bikes. However, arguably the most common method of transportation in the United States is automobiles.
If you decide while in the United States that you would like a car, the first thing you will need to determine is if you need an international student auto loan. If you do need an international student auto loan, you will need to secure that loan before the next step. Next, you will need to decide if you want to buy or lease a car. We have previously wrote about buying versus leasing. Below, we will discuss the buying side.
Buying a Car: Pros
If you decide to buy a car, it, obviously, becomes yours. Even if you pay for it with an international student car loan, each payment you make toward that loan builds your equity in the car. When the international student car loan is paid off, the car is then yours. Obviously then, once the international student auto loan has been paid off, there are no more monthly payments you will have to make. Sure, you will have to pay for gas, maintenance, and any upgrades you want to make, but you will not have to make any more payments toward ownership in the car. It is yours. Another nice aspect to buying a car is that your credit does not have to be great. That may be a different story in securing an international student auto loan however. Finally, if you decide down the road that you would like a new car, or don’t need the car but need money for something else, you have the option to sell your car.
Buying a Car: Cons
Buying a car can be more expensive than leasing a car. Maybe not overall, that will depend on a variety of factors, but it will most likely be more expensive in the short term. One of the reasons it may be more expensive is because of the international student auto loan. The interest payments that you make will be based off of the overall balance, which can lead to higher interest payments. Also, the sales tax can be higher as well.
Another possible con to buying a car is the length of the repayment term for the international student auto loan. If you agree to enter into a longer term for the international student car loan in order to have lower monthly payments, you will be paying more overall in interest. As a result, this could lead you into paying more than the value of the car. Also, when you buy a car, unlike an option most leases have, you will most likely need a down payment. This can be anywhere from ten to twenty percent, and can be challenging to come up with. Most leases do not require a down payment.
Finally, another downside to buying a car is the unpredictable market value of automobiles. Cars depreciate over time, and new innovations and technology can lessen the value of your car, even if it is only a couple of years old. An accident history can also lessen the value of your car if you are trying to sell or trade it in.
Keep an eye out later this week for our blog detailing the pros and cons of leasing a car!
At Nomad Credit, we can help you find potential auto loan options that do not require credit history or a social security number as well as answer any questions or concerns you may have while studying abroad in the United States.
For more information, visit Nomad Credit. In addition to potential international student auto loans we will help you find potential options for international student education loans or study loans as well.
If you have any questions, send an email to firstname.lastname@example.org and we will happily help!