Purchasing Car in US as International Student | Financing, Used Cars & Hidden Fees
Summary
TLDRIn 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
🚗 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.
🚘 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.
🚙 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.
🚐 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.
Mindmap
Keywords
💡First car
💡Credit history
💡New car vs used car
💡SUV vs sedan
💡Car financing
💡Depreciation
💡Insurance costs
💡Dealerships
💡Maintenance
💡Need vs want
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
could easily make hundred dollars by
just getting I just I'm referring you to
something you can make hundred dollars
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
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