Purchasing Car in US as International Student | Financing, Used Cars & Hidden Fees

Summary

In this video, the host offers a comprehensive guide to purchasing a first car, addressing key considerations such as timing, new vs. used cars, SUV vs. sedan, and preferred manufacturers. They discuss financing options, comparing buying vs. leasing, and highlight the importance of credit history for securing favorable loan terms. The video also covers hidden costs like title fees, insurance, and maintenance, emphasizing the need to distinguish between a car as a necessity versus a luxury.

Takeaways

• 🚗 Understanding when and why you need a car, especially for internships or jobs where commuting is necessary.
• 🔄 Comparing the benefits of buying a new car versus a used car, with the speaker favoring used cars due to lower cost and depreciation benefits.
• 🚙 Deciding between an SUV or a sedan based on personal needs, such as weather conditions or storage capacity.
• 🏪 Exploring different places to buy a car, including dealerships, CarMax, rental companies, and local dealers, while cautioning against Carvana.
• 🇯🇵 Highlighting the preference for reliable brands like Honda and Toyota, especially for long-term value and low maintenance costs.
• 💳 Emphasizing the importance of building a credit history to secure better financing rates when purchasing a car.
• 📉 Discussing car financing options, including loans, credit unions, and the potential to refinance for better rates later.
• 📊 Weighing the pros and cons of buying versus leasing a car, especially considering mileage limits and equity-building.
• 💸 Outlining the hidden costs of owning a car, such as insurance, title fees, registration, maintenance, and gas expenses.
• ❓ Encouraging buyers to assess whether purchasing a car is a need or a want, advising against expensive purchases without solid financial backing.

Q & A

Why is it important to analyze whether you need or want a car before purchasing?

It's important to determine whether buying a car is a need or a want to avoid unnecessary financial strain. Many people, especially students, buy expensive cars like Audis or Teslas without considering if they truly need them, leading to struggles with payments. Prioritizing needs can help avoid such difficulties.

What factors should students consider when deciding to buy a car?

Students should consider their commuting needs, the cost of buying versus using Uber, whether they know how to drive, and if it's more practical to buy a car during an internship or full-time job. A cost-benefit analysis of car ownership vs. ridesharing is crucial.

What is the speaker's recommendation for buying a new car versus a used car?

The speaker recommends buying a used car, especially for first-time buyers. Used cars have already depreciated, making them more affordable. For example, the speaker bought a used Toyota RAV4 for $10,000 less than a new model, with a similar driving experience.

Why is credit history important when financing a car?

Having a good credit history helps secure lower interest rates when financing a car. Without a credit history, you may face higher interest rates. The speaker advises getting a credit card early to build credit before needing to finance a car.

What are the pros and cons of buying an SUV versus a sedan?

SUVs are preferred for their cargo space and performance in snowy areas, but sedans work well even in snowy regions if roads are cleared. SUVs may be useful for those who need extra space or frequently transport goods, while sedans offer lower costs and similar functionality.

Where does the speaker recommend buying a car from?

The speaker recommends buying from local dealerships or websites like CarMax rather than Carvana. CarMax offers a more reliable purchasing experience compared to Carvana, which may have issues with the car or its return policy. Additionally, rental companies like Hertz and Enterprise sell cars at reasonable prices.

Why do many Asian buyers prefer brands like Honda and Toyota?

Asian buyers prefer Honda and Toyota because these brands hold their value well and are reliable for long-term use. They also have affordable maintenance costs, making them ideal for practical buyers. Toyota’s luxury brand is Lexus, and Honda’s is Acura.

What is the benefit of refinancing a car loan in the U.S.?

Refinancing a car loan can reduce the interest rate, especially after building credit history. For example, the speaker's initial loan had a 5.6% interest rate, which was later refinanced to 2.2%. Refinancing can save money over the long term.

What are the advantages and disadvantages of leasing a car?

Leasing a car may be advantageous for those who want an expensive vehicle with lower monthly payments, but it comes with mileage limits and no ownership equity. Buying allows for building equity and avoids extra costs for mileage overages, making it better for frequent drivers.

What hidden costs should buyers be aware of when purchasing a car?

Hidden costs include title fees, registration fees (which vary by state), insurance, and maintenance. Additionally, services like oil changes and car washes can add up. Buyers should factor in these ongoing expenses when calculating the total cost of car ownership.

Outlines

00:00

🚗 Introduction to Buying Your First Car

In this video, the speaker introduces the topic of purchasing your first car, discussing personal experiences and common mistakes. The speaker owns a Toyota RAV4 and has created a 12-page guide available via a link in the description. Key topics include understanding the need for a car, deciding between new or used vehicles, choosing between SUVs and sedans, and covering hidden costs like financing, insurance, and registration. The video aims to provide a comprehensive guide to buying a first car, with links to additional resources shared throughout the video.

05:03

🚘 When and Why You Need a Car

The speaker discusses the timing and reasons for buying a car, especially for students. Many buy cars when they start internships or full-time jobs, where commuting becomes necessary. The speaker emphasizes doing a cost-benefit analysis to see if owning a car is cheaper than using Uber, and learning how to drive before arriving in the U.S. Driving rules in the U.S. are also highlighted, such as left-hand drive and the importance of credit history in financing a vehicle.

10:04

🚙 New vs. Used Cars

The speaker shares a personal preference for buying used cars, specifically discussing a Toyota RAV4 bought in 2019. Pre-pandemic, used cars were significantly cheaper than new ones, but post-pandemic, prices are closer. Depreciation is highlighted as a key factor in favor of used cars. The speaker suggests using tools like Kelley Blue Book to compare prices and offers pros and cons of both new and used cars, mentioning maintenance issues and depreciation as key considerations.

15:04

🚐 SUV vs. Sedan: Which to Choose

Here, the speaker compares SUVs and sedans, noting that SUVs are popular in snowy states like Colorado and Illinois. However, sedans can also handle such conditions well. The speaker personally chose a compact SUV for its storage capacity, useful for commuting between cities. Renting a U-Haul is suggested for those with sedans who need to transport large items. The speaker downplays the necessity of an SUV, even in snowy areas, as roads are usually cleared.

🏬 Where to Buy Your Car

The speaker discusses different options for purchasing a car, including dealerships, Carvana, and CarMax. Dealerships are noted for their haggling, which is not always worth the effort. CarMax is recommended over Carvana due to better customer service and reliability. The speaker also suggests checking rental companies like Hertz and Enterprise for used cars, as they tend to sell cars after a certain mileage. Seeing a car in person is highly recommended before buying.

🚗 Preferred Car Manufacturers

The speaker expresses a preference for Asian car brands, particularly Hondas and Toyotas, due to their reliability, value retention, and affordable maintenance. The speaker gives a personal example of how their Toyota RAV4 retained its value over time. Luxury brands like Acura (Honda) and Lexus (Toyota) are also mentioned. While the speaker enjoys driving various cars, they prioritize reliability in their personal vehicle choices.

💳 Financing Your Car Purchase

The speaker provides insights into car financing, explaining that dealerships make money from financing deals, often offering higher interest rates. Refinancing a loan after a few months is suggested as a way to lower interest rates. The speaker shares a personal experience of refinancing from a 5.6% to 2.2% interest rate. Credit unions are recommended for better loan terms, especially for students, as they generally offer lower rates than private lenders.

💼 Should You Buy or Lease a Car?

The speaker discusses the pros and cons of buying versus leasing a car. Buying allows for building equity in the vehicle, whereas leasing has mileage limits and no equity accumulation. Leasing may be suitable for expensive cars, but the speaker warns that exceeding mileage limits can result in additional costs. For those who frequently take road trips, buying is recommended to avoid these penalties.

📋 Hidden Costs of Car Ownership

Owning a car comes with various hidden costs such as title fees, registration, maintenance, and insurance. The speaker provides examples of registration fees and maintenance costs, emphasizing that these expenses can add up over time. Insurance costs are highlighted, particularly for new drivers, and the speaker shares personal monthly costs for both car payments and insurance. Fuel costs are also mentioned, showing that car ownership can be more expensive than it appears.

💡 Need vs. Want: Is the Car Necessary?

The speaker encourages viewers to consider whether buying a car is a need or a want. Students, in particular, are advised to avoid purchasing expensive cars like Teslas or Audis, as they may struggle with payments while having student loans. The speaker advises focusing on paying off educational loans before considering luxury vehicles. For those with high salaries, the speaker suggests buying any car they want but urges careful financial planning for others.

🎁 Final Thoughts and Bonus Offers

As a reward for viewers who watched the entire video, the speaker shares two links where they can easily make $100 through referrals. The speaker also invites viewers to comment with any questions about car purchases and promises to help. Finally, viewers are encouraged to download the guide linked in the video description.

Keywords

💡First car

The video discusses the process of buying a first car, including common mistakes and important considerations. The speaker reflects on personal experiences and provides advice for first-time buyers. The theme includes understanding whether one truly needs a car and the decision between buying new or used.

💡Credit history

Credit history is emphasized as a crucial factor when financing a car. The video explains that without a solid credit history, obtaining a car loan can lead to higher interest rates. The speaker advises viewers to get a credit card early to build credit in preparation for financing a car.

💡New car vs used car

A significant point in the video is the comparison between buying a new car and a used car. The speaker highlights the benefits and drawbacks of both, such as new cars having lower maintenance but higher depreciation, while used cars are cheaper but may come with unknown issues. The speaker personally prefers used cars due to cost savings.

💡SUV vs sedan

The video explores the pros and cons of SUVs versus sedans, depending on where the buyer lives and their needs. The speaker mentions that SUVs are often preferred in areas with snow, like Colorado or Boston, but sedans can also be practical in those areas. The decision also depends on how much cargo the buyer needs to transport.

💡Car financing

The process of car financing is discussed in detail, with a focus on understanding interest rates and loan options. The speaker explains that dealerships often offer higher interest rates and encourages viewers to consider refinancing later for better terms. Credit unions are recommended for lower interest rates.

💡Depreciation

Depreciation refers to the reduction in the value of a car over time, especially when a new car is driven off the lot. The video explains that buying a used car avoids much of the depreciation cost, making it a smarter financial choice for many first-time buyers.

💡Insurance costs

The video emphasizes the importance of factoring in insurance costs when budgeting for a car. Insurance rates depend on the driver’s experience and the car type. The speaker shares personal costs for car insurance, giving viewers a realistic perspective on the hidden costs of owning a car.

💡Dealerships

Dealerships are described as a common but often challenging place to buy a car due to their negotiation tactics. The video suggests alternative ways to purchase cars, such as using CarMax or local dealers' websites, which may offer a more straightforward buying experience.

💡Maintenance

Maintenance costs are discussed as a recurring expense that comes with car ownership. The speaker mentions that while new cars often come with free services for the first 24,000 miles, used cars might require more frequent maintenance. The video also touches on where to get services, like dealerships versus more affordable options like Walmart.

💡Need vs want

The video encourages viewers to differentiate between needing and wanting a car. The speaker stresses that students should consider whether a car is necessary for commuting or if alternatives, like public transportation or ride-sharing, are more cost-effective. This helps avoid unnecessary financial strain.

Highlights

Importance of conducting a cost-benefit analysis before purchasing a car, especially during internships.

Recommendations on whether to buy a new or used car, highlighting the impact of depreciation and post-COVID market changes.

Preference for old cars with lower mileage for first-time buyers to avoid concerns about minor damages.

Differences between SUVs and sedans in regions with snow, and the convenience of SUVs for transporting large items.

Caution against dealership haggling and recommendations for alternative car-buying platforms like CarMax over Carvana.

Recommendation to buy cars from rental companies like Hertz and Enterprise for more reliable options.

Preference for Asian car brands, especially Toyota and Honda, due to their reliability and low maintenance costs.

Advice to start building a credit history early in the US, as it impacts car financing interest rates.

Explanation of how dealerships make money from financing deals and how refinancing can lower interest rates.

Importance of joining credit unions for lower interest rates on car loans and other financial benefits.

Comparison of buying versus leasing a car, focusing on the pros and cons of each, such as equity building and mileage limits.

Hidden costs of car ownership, including registration, insurance, and maintenance fees, which can significantly increase overall expenses.

Emphasis on assessing whether buying a car is a need or a want, especially for students with education loans.

Financial advice for students to avoid expensive luxury cars if they have other financial obligations, like student loans.

Encouragement to check out referral links for potential financial rewards, which are shared at the end of the video.

Transcripts

everyone welcome to another video and in

this video we will be talking about

purchasing your first car over the years

I've met a lot of people who have

purchased their first cars and ever I've

realized what mistakes they make and

what mistakes I made and what good

things they have done and what was the

right thing I did when I was purchasing

the car right I have a Toyota RAV4 right

now I love that car so I've created this

like amazing guide wrote this 12 Pages

guide which I'm going to leave the link

in description I've created that guide

you can download it but in that in this

video I'm going to cover all of those

topics because I'm gonna forget I've

written down all of the topics so the

first is when and why do you need a car

second is buying a new car versus old

car to the bias UV versus sedan where to

buy the car from what manufacturers I

prefer and the reasoning behind it

financing your car should you buy a car

or a lease a car you know title fees

registration Insurance all of this

hidden costs and then do you need a car

or do you want the car I think that's a

very important factor to consider as

well and in this video I'm going to

leave a link of another guide somewhere

in the video you'll have to watch the

whole video to get that link but let's

just get started and talk about it the

US is huge New York La Chicago Austin

maybe Dallas downtown these places you

can commute right you can commute

without needing a car college campuses

as well they have a lot of

Transportation which makes it easy to

commute easily but if you move anywhere

else right if you're moving for

internship or work you would need a car

so my first point right when and why do

you need to come usually students buy

their car first car when they're going

for an internship and they need it for

their daily commute or they're going for

their full job full-time job and they

need a card no matter what because they

have to commute to work which is far

away and they can't afford Ubers but I

always recommend during internship if

you can do a cost benefit analysis and

see if buying a car is cheaper or if

going through Uber is cheaper also not

everybody knows how to drive a car so

that's also some factor to consider but

I would recommend learn how to drive

before coming here and once you come

here you can just like know how to

handle all of the cars here are

automatic gear so you don't have to

fiddle around with gears which makes it

super easy but you need to know how the

rule work because there's right hand

driving and left hand driving in the US

we sit on the left and drive on the

right in India it's vice versa so you

need to know that right how how to drive

better one thing I want to mention

before we go further in this video is if

you're in first year second year if

you're looking forward to buying your

car soon please get a credit card

because your credit history is going to

be super important when you finance in

your car without a credit history you

won't be able to finance even if you

will be able to finance you will have to

pay a huge amount of interest on that

car so just get a credit card I'm Gonna

Leave a link in description of all my

credit card recommendations that the

video I've shared how to get your first

credit card second point is buying a new

car versus old car I bought a used car

right this was pre-covered 2019 and I

bought my first car during that time the

cost of used cars was substantially

lower than the cost of new cars post

covet the cost of new car is almost

similar to buying a old car I prefer the

old car I'll tell you my reasoning about

a Toyota RAV4 2019 version it was ten

thousand dollars cheaper than getting a

new car from the dealership buying used

car is good because the depreciative

value is already done so I don't have to

worry about all of that and I can just

drive off I bought my car for 23 000

whereas the new version of the same car

was 33 000 so think about it see whether

you can go to a website called Kelly

Blue Book and check whether a new car is

cheaper or the old one is cheaper I'm

gonna sell it like give you some

recommendations as well where you can

buy a car pros and cons of buying a new

car versus old car right new car you

know you don't have to worry about

maintenance because it's pretty new some

people drive

like crazy so that's a problem with the

old car old car doesn't have the

depreciating thing but new car has that

as soon as you drive it off the

dealership it will depreciate uh plus if

you're new to the US and if you're

driving for the first time and this is

your first car I would recommend buying

an old car which has driven like 25 30

000 miles maybe even 40 000 Miles

because you might hit somebody something

or you might scratch the paint of your

car and it will make it a little bit

easier on the mind when it's an old car

rather than the new one my third point

is buying a SUV versus sedan a lot of

people consider an SUV a SUV when they

are living in cities or states like

Colorado Boston or if they're living in

Illinois anywhere in Midwest where it

snows a lot they consider buying a SUV

let's say a Subaru there's different

brands right so a four by four basic

leak but if you go to these cities you

will see people driving sedans with no

problem at all now the reason why I

preferred SUV and I like the SUV I got a

compact SUV is because I could load up a

lot of things in it and like transfer it

from place to place me and my wife were

living separate at the time when we when

I bought the car so I had to commute a

lot from Tucson to Phoenix Phoenix to

Tucson and carry a lot of things in the

car which made it super easy when I had

basically let's say you don't want to

buy SUV you love sedans you can still

rent a U-Haul and transfer all of those

things without any problem so don't

worry about getting SUV versus a sedan

if even if you're living in places where

there's a lot of snow because they

usually clear out the roads so your

sedan will drive easily fourth point

where to buy the car from now there's a

lot of options you know you will have

the dealerships of course that's the

first option I don't like them

personally because they haggle a lot and

even after hagging a lot they would like

reduce the price of the car very new

amount so it is not worth the effort of

going through that process the second

option is buying to karvana I do not

recommend carvana at all I've had a

friend who bought the car from them and

the car started having problems even

there if there's return policy it's not

that easy to buy the car and then you

send it back but CarMax you know CarMax

is also website CarMax is much much

better than carbana 100 times better and

Karma is almost going to go bankrupt

pretty soon now another option is going

to dealer's website and checking out all

the dealers in the US have new vehicles

and used vehicles as well so you can

check out all of the portfolios and all

of the cars they have available on their

website

um on your local dealers shop and then

go and drive I like that personally

because I can feel the car how it drives

I can check it out I can see if I fit

really well how it feels inside how it

feels to drive how it turns all of those

things I can see and then when I go to

the dealer I can see you know what

financing options I have plus seeing a

car in person is amazing and it cannot

compare seeing a car online it doesn't

compare at all then there's rental

companies there's a lot of rental

companies like Hertz Enterprise national

which sells their cars as well rental

car companies have hundreds and

thousands of vehicles as soon as they

hit their 30 000 marks or Twenty

Thousand marks or ten thousand marks

they tend to sell it because then it

becomes a nightmare for them to get its

service so you can check out all of

these rental cars websites I'm gonna

leave some in the description below as

well now fifth point is what

manufacturers are prefer I am like this

is a Asian thing right if you'll see a

Chinese person Indian person they would

have Hondas and Toyotas

or they would have Teslas a lot of like

rich people have Teslas as well but a

lot majority of Asian people have Hondas

and Toyotas because Hondas and Toyotas

hold their value really well for example

I'll give you an example I bought my car

for 23 000 when it had 11 000 miles the

same car even with more mileage is

selling for 24

thousand something the 2019 model as of

right now Honda's luxury brand is a Cura

Toyota's luxury band is Lexus and you'll

see a lot of Asians and Indians buying

Toyotas and Hondas because the service

is cheap the car drives really well for

up to like 250 300 000 without any

problem and the servicing is like not

that expensive even if you have to get

it done so

that's my preferred thing right I have

driven a lot of car I've driven

Mitsubishis I've driven to Yodas Hondas

uh Nissan uh Hyundai Audi Mercedes have

driven all of these kind of driven BMW

as well

I like really I loved all these cars

I've even driven Chevy uh driven Dodge

Challenger as well I've Loved all of

these cars and I drive them when I'm

renting them out and I enjoy these cars

but when I come home I want a reliable

car and that's why I have a Toyota sixth

point is how to finance your car there

are two options right you can pay off

the car by yourself you can get a loan

like a soft loan from your friends and

family you can pay off the car you can

save like five six thousand dollars and

buy a secondhand car if you have to

finance a car you would get a higher

interest rate because you don't have a

credit history that's why I recommend

everyone as soon as they come to the US

you should get a credit card so that you

develop that credit history and you will

be able to get a loan with lower

interest rate lower percent interest

rate right now financing your car is a

little tricky as well if you go to a

dealer and tell them that I want to

finance my car the dealers make money

off the financing deal so they'll charge

you a higher interest rate I didn't not

know this when I was buying my car and I

had a decent credit score not so good I

went to the dealer he gave me a loan

through Capital One my loan interest

like interest rate was 5.6 percent but

when I refinance that loan my new

interest rate was 2.2 percent so there's

that option as well let's say you get a

higher interest rate right now because

you don't have a credit history do not

worry about it you can refinance that

loan and get a lower interest rate and

basically save a lot of money one more

thing I would recommend is open a credit

union account every University doesn't

matter if it's stevens or San Jose State

or Harvard or Stanford all of them have

credit unions open account with them

because Credit Unions have lower

interest loans for students and for

um for the community I have taken my

loan from one AZ Credit Union and even

my home loan is through them and it's

much cheaper as compared to going with

like a private lender or somebody

um like Chase or Capital One and

remember if you get a higher interest

rate right now and you need a card don't

worry about it you can always refinance

the loan and figure it out like

refinancing is very common option in the

US they do it for car loans they go it

to it for personal loans they do it even

for Home Loans so not a problem at all

seventh point is should you buy or lease

a current I got this question a lot and

people had comments as well right people

said if you're if you're getting a very

expensive car lease it because they're

pros and cons released in buying right

in buying you buying the car you're

creating equity for example in my car

right now I have six thousand dollars of

remaining loans so I still have seventy

thousand dollars of equity if I sell it

for twenty three thousand right so I'm

going to able to recoup my cost and the

only thing I paid was the six thousand

now in terms of lease you don't have

that you don't have any Equity plus

these also have a limit on the amount of

miles you can drive on the car usually

it's 12 000 miles per year you might

think that's a lot of miles and I don't

have to worry about it but if you're

taking any if you're like me and you

love to take road trips and you commute

a lot you will be putting on miles on

the car really quickly and when you're

leasing a car and and going over those

mile limit every mile will cost you a

lot of money and you'll have to pay that

at the end of your lease term now eight

point is title registration fees

Insurance all of these hidden fees if

you're buying a five thousand dollar car

it's just not limited to that okay

there's going to be a title fees when

you're buying that car then there's

going to be a registration free every

year you're owning that car it depends

state to state for example in Arizona I

pay like 300 some dollars for my

registration fee every year you have to

maintain that they give you a tag for

that that your registration is updated

then there is service cost I have to

take my car for maintenance every time I

go for maintenance it's like hundred

dollars two hundred dollars

um with a new car you have like six

seven Services free every 5 000 miles

you have a service free until 25 000 or

24 000 miles depending on brand to brand

but after that the service might cost

more or less best depending on if you go

to the authorized dealer I always go to

the Toyota service center that's why I

pay more than amps I should be paying

but I do pay that but if I go to Walmart

just for oil change it's usually way

lesser there's car wash as well right if

you have to wash your car it's going to

cost you 10 20 dollars plus insurance is

expensive me and my wife my wife is a

new driver so all together our insurance

cost 138 dollars per month right now so

add that to the payment you're already

making for my car I make a payment of

562 dollars every month my loan is very

short term that's why I pay my I make

higher uh payments 562 dollars plus 138

for Insurance Plus any of the service

costs which is including so for owning

that cost plus gas also every month

Patrol will cost you 50 60 dollars to

for so owning that car is going to run

me anywhere between

let's say six hundred seven hundred

dollars if you're buying a very used car

under 10 000 it's going to be much

cheaper than that but that is still

there right like owning a cost is owning

a car is expensive and there's a lot of

hidden costs which you have to factor in

so please do that my last point is is it

a need or a want need versus want right

I've seen a lot of students buying

Camaros and buying Audis and buying

Teslas and

and then they struggle with the payments

if you have an education loan please

focus on paying that back first just

because it's a lot of money and you're

accruing interest on that and plus your

first car you might not get a very good

deal on that car as compared to let's

say the second car or third car you're

getting or once you have a credit

history you can refinance a loan right

so try buying a cheap car

um

that's what I recommend if you're making

six figures 150 200 300K buy whatever

you card you want right I don't really

care you can buy I have friends of

friends who have bought bought Maseratis

because they're making 400k 500k a year

you can totally do that do that my

recommendation consider asking yourself

the question do I need this or do I want

this right now since you guys stayed

until the end of the video I want to

share I'm Gonna Leave two links okay you

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so you can check that out I'm gonna

leave that link in description if you've

watched this whole video and if you like

it thank you so much guys for watching I

hope you like this one please comment

any of the questions you have regarding

card purchase and I'll be able to help

you out download the guide I have in the

description as well and until then I'll

see you next one take care everyone