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-   -   Guide: First-time car ownership in the USA (https://www.team-bhp.com/forum/international-automotive-scene/168455-guide-first-time-car-ownership-usa.html)

Note: This thread has been spun-off from the generic NA car ownership thread to keep the following content precise.

Target audience: This thread aims to serve as a guide for first-time residents in the US, as they look to enable themselves to drive and own a car for the first time in the US.


Typical scenario:

You've arrived in the US for the first time on a long-term stint- with/without family in-tow. Apart from a few suggestions from people - some of which might be conflicting, setting up residence in the US seems to be a daunting experience, as you encounter the crisp formal US business culture, quite far removed from the cozy informal system you've been used to back in India!

As you successfully move into your US home, you continue your acclimatization to the new system, as you note the following observations:

1. Walking to your local points of interest - supermarkets, restaurants, theaters etc, is not as established as you are used to back in India. You still persist with walking to these places nevertheless.
2. Inclement weather, extreme or quickly changing weather starts hampering your walking plans.
3. Being a huge country, distances become challenging enough to discourage walking as a main transportation mechanism
4. Cabs are not an affordable regular means of transportation
5. Public transport has its usual limitations.
6. You cannot park your requirements long anough to coincide with picking up a rental car or hitching a ride with a friend.

At this point of your setting up in the US, you arrive at the unavoidable conclusion: you cannot do without a car in the US.

Its from this point on, I have listed out pointers that might help - from my own experience; to dumb down your mobility journey, to try and remove the typical edginess and guess-work from that process, and to help your decision-making ability in choosing the right car ownership path.


Own or Lease?

Leasing a new car is a very popular means of mobility in the US, and is also more economical than purchasing outright. Leasing - which is essentially a contract between the manufacturer and you, allows you to use the car for a pre-determined multi-year duration, governed by well-defined terms around its usage such as maximum mileage allowed etc. At the end of the lease period, you return the car back to the dealership.

Advantages of leasing: Lowered cost of new car "ownership", since you dont have to take out a car loan: pay an upfront marginal payment, followed by monthly EMIs for the rest of the lease period.

Disadvantages of leasing: Car is never yours. And more importantly, breaking a lease or its terms will prove to be prohibitively expensive -something you would do well to factor in if you choose to lease.

Owning a new/used car means exactly the same as in India. You pay/finance the vehicle and are the sole master of your car and are free to use it as you see fit, including reselling it later.


Critical Factors

These are 2 critical factors that play a major role in all financial aspects of your car ownership.

1. Credit score:

Everything, including the rate of interest on your auto loan, is tied to your credit score. Your credit score typically starts building up from the 3rd month after your US income starts, with the 6th month onwards considered to be vital for measuring your credit score.

Long story short - your credit score follows your ability to repay back credit on time. A credit score of 700 + is considered to be the golden zone, and the best finance deals become available in this zone.

Accordingly, there are 2 approaches that can be considered at this stage, based on how critical your car purchase is to you:

a. Planned approach: I chose to follow this path. Plan your car ownership after your credit score hits 700+. You are assured of the sweetest terms/lowest APR rates. My auto loan is at 1.76% APR from Day 1, the lowest current APR in the US.

b. Bold approach: Finance your car purchase regardless of your credit score, if circumstamces absolutely dictate you to buy a car. You auto loan will be at the highest APR, with 12-14% APR also not unheard of.

If you choose this path, after a few months of paying your high APR auto loan, assuming you've managed to improve your credit scores all along, you can explore refinancing your auto loan to avail a lowered APR.


2. Local driver's license:

A factor as crucial as your credit score. Most US states have a cap on the duration an international license can be used while being a resident of that state. Typically its 1 year from start of residence. However, I would strongly recommend you prioritize getting your local driver's license ASAP, for the following reasons:

a. Your Indian license's acceptability is not consistent with all state troopers, and some have even been known to issue $ 500 tickets for "driving without a valid license", after not recognizing your Indian license.

b. Your local license has a large role to play in determining your car insurance rates - as you will read later on in this article

c. That independence and feel-good factor, since the local license is a widely accepted ID for almost all transactions.

Blue Book ® value

One of the very nice aspects of the maturity of the US car market is the (Kelley) Blue Book value. The Blue Book value is the guidance price of any car model - new/used/certified, specific to your location and variant preferences.

A Blue Book price guidance for a 2012 Hemi Dodge Challenger:


My fellow-Moderator aah78 (thanks, Advait!) also adds TrueCar and NADA Guides to this list of car price tools that you can use to your advantage while negotiating a car price.


Dealing with car dealers

As a tongue-in-cheek activity before financing, you also start talking to various car dealers at this stage to shortlist your car.

I would like to reiterate an important fact during your dealer interaction: negotiate hard on the final price of the car, since no car rate is fixed in the US - new or used. Remember to do straight-talking all the way.

If a new car, I would personally prefer negotiating and arriving at a final price on the phone, before actually getting to the dealership, since this has proven generally more effective than landing at the dealer and then talking about final price.

If a used/certified pre-owned car, test-drive the car and negotiate hard to keep the quoted price in line with the Blue Book values. You would be surprised to know that quite a few used car dealers dont expect a customer to be aware of the Blue Book value.


Verifying a used car's history- the CarFax® report:

Yet another excellent tool in the mature US car market: the CarFax report. Look up a used car's history in its CarFax report, using its VIN.

Although not 100% failproof (an accident repair may not have been claimed on insurance, and hence CarFax wouldnt have a record of that accident), a dependable source of verifying a used car's history nevertheless. Also, accident repairs not claimed on insurance (and therefore not reflected in a CarFax report) typically tend to be minor incidents < $500 worth, and ideally shouldnt affect the overall health of the car.

I would personally recommend paying for the comprehensive report on CarFax's website, rather than relying solely on a copy the dealer provided. I have attached a sample CarFax report with this post.

This is one feature that I wished existed in the Indian used car market.


Auto-loan financiers:

As you now start talking to various banks for your auto loan, notable mention must be made at this stage of one particular financial institution that is a desi favorite! In fact, owing to the credit score factor alone for a lot of first-time car buyers, a significant section of the Indian diaspora turn to DCU - Digital Federal Credit Union, a popular credit union in the US.

Upon recommendation, I myself went to DCU for my auto loan, and observed the following positives:

1. Ease of transaction : the customer support representative did a quick credit score check when I called the first time, and offered the 1.76% APR and a complimentary credit card in the same sentence.

I am led to believe most banks would find it hard-pressed to offer such low APRs even for qualified customers. In fact, when I mentioned the APR to the GM-Certified dealership at the time of buying my Certified Pre-Owned Chevrolet Equinox from them, they were genuinely surprised and admitted that their banking partners could never have offered my autoloan at that rate.

2. DCU sends the loan amount as a cheque, via overnight FedEx if required (as was in my case), to you. That gives me additional control as a customer, in the event I chose to cancel a particular car purchase due to any last-minute non-integrity detected from the dealer.

Insurance:

By this stage, you've booked the car of your choice, have arranged financing the car and are walking in to the dealership tomorrow to get the car home. What follows is a 2-phase approach.

Phase 1- Purchasing your first auto insurance

Now you must purchase a new car insurance policy as a legal prerequisite before you are allowed to drive the car back. This is an important financial implication, and you would do well to spend quality time going through this process thoroughly.

You will end up having to choose online between the typical large US insurance players - listed below, primarily because this is your first time purchasing an auto insurance policy:

1. GEICO
2. Progressive
3. State Farm
4. Esurance
5. Allstate


You must be aware of 3 queries that you will be asked during your online application, that play a large role in determining your eventual quote:

a. Have you ever had auto insurance before?


A "Yes" to this query plays a large role in driving down your new quote. However, being your first time, you will answer "No" and therefore automatically setup a high premium to begin with.

b. Your license details


Remember I mentioned earlier about the importance of having your local license before getting to this stage? Providing your local license details serves as some measure of counterbalance in reducing your insurance quote. And the longer you have had your local license by this stage, the more productive it is towards reducing your quote.

However, if you do not have your local license yet by this stage, you can still proceed to supply your Indian license details to complete your insurance purchase. But bear in mind that this will serve to increase your insurance quote.

Note that using your local Learners Permit for this stage is not advised, primarily due to the steep premiums that go with it.

c. Intended usage of your car: leisure/work ?


A third query that directly determines your insurance quote. I understand that if your usage is Leisure rather than for Work, that lowers the eventual quote by an extent.

My fellow-moderator aah78 (thanks again, Advait!), summarizes the list of all parameters that determine your insurance quote: location, traffic density, age, driving history, parking situation, (approx.) yearly miles to be driven.


Phase 2- After you have purchased your first auto insurance policy

You have your auto insurance by now, albeit at a high premium. You now begin to think about rationalizing that premium to more acceptable levels. After a soak-in period of atleast a month, you can look at other insurance options :

1. Compare new quotes online yourself. Your current insurer might themselves have a more competitive quote
2. Consider regional/smaller insurers. This is known to be an effective method to lower your new quotes.
3. Adapt to Usage-based insurance (UBI) telematics to build up a driving history with your current insurer to reduce premiums from them eventually.

You now are in the phase of settling down with your car comfortably.


Registration plates

As the final activity in your first US car ownership journey is your car registration/license plates. This is another major difference between US/India car ownership. The registration plates on your car change with every change in ownership, and is not fixed like in India.

Most dealers arrange your new plates with the DMV directly, and these are couriered home by your dealer for you to fit onto your car directly. While your permanent license plates arrive, the dealer would provide temporary dealer registration plates to enable you to start using the car.

In some cases, if there are any delays from the DMV in processing your permanent registration plates, they will enable you with temporary registration - mostly in the form of a paper plate (not kidding).

You are now all set. You will have to drive to the DMV yearly to renew your registration- an important activity and another difference between US/India procedures.

Other salient points

1. If you move to another state, you must get your car and your own license re-registered in that state. There is a typical maximum cooling period(check with the local DMV for exact duration) by when you are obligated to have obtained new plates/drivers license of your new state.

2. Avoid following a stereotypical approach in restricting your car choice to a list of particular models. Remember that there are other equally good/better options as well in the world's largest automotive market - some that you may not have heard of in India: such as Mazda, Subaru or even current generation American makes. And no, none of the alternatives ever explode.

The wider you cast your net, the better options you get for yourself.

3. Avoid confining yourself to a restricted set of dealerships that are used to dealing with set demographics, because "your friend said so"! The risk with such an approach is that you tend to inherit all the downsides that dealership represents, in addition to whatever you perceive to have gained. Do your own homework.

Remember, being a Team-BHPian, you are expected to be more auto-intelligent than the average Joe out there!

4. Being averse to used cars before this, I have had the pleasure of owning and enjoying a mint condition Certified Pre-Owned SUV. I would strongly recommend the CPO route, for that peace-of-mind.

In fact, given an option between a CPO/used car, you would do well going with the CPO, regardless of its slightly higher price. The maintenance and manufacturer commitment more than compensate for that price.

5. Check with your manufacturer whether warranty services are free or chargeable, since this policy is said to vary between manufacturers (thanks aah78 again!) . Most cars today have onboard intelligence that lets you know when you need to have your car serviced.

6. A new car dealership sells multiple marques - dont be surprised!

7. www.DMV.org is a good source of referencing DMV procedures (thanks aah78)

Some very sound advise. Maybe one item to add, not necessarily only related to cars but to everything you embark on, getting a SSN (social security number). You will need a SSN to register with a bank, get your drivers license, get utilities to your apartment etc etc.

Exactly. My first car abroad - a Mazda Protege was bought from a known-unknown source. It was from the friend of friend. He had bought from a leasing company that had mileage roll back. The time was then - I was auto-illiterate. Thinking about fellow countrymen coming to help, I closed my eyes and put my money on it. Didn't even check carafax or similar report. It clearly had the leasing thing and mileage roll back mentioned on it. The car had faulty transmission which later I discovered and fixed for 2500$.

When you buy a second hand car, at the time of registering it in your name, you have to do a state-inspection. This is mandatory for car to clear. Some important 50-60 point checks includes tyres, wipers and stuff like that. If the car does not clear that inspection, you cannot take it on road. My Mazda had failed there too. And I spent another 1100$ for that.

I had purchased that car before I got my driving license. And you can imagine all the hardships that followed due to it - registration, getting license plates, state inspection, getting insurance without a license and so on! Felt extremely bad about being cheated by a fellow countryman who claimed to be going back to India for good. And later I discovered that he just changed the city from east coast to somewhere in central. Things happen, you learn the hard way. Wish I was educated then with all these things someone to tell me.

So after too many issues, I sold the car to a professor who needed something that will be little short of breaking on road to let his son play with first car after getting his learner's license. With all the history, it worked just perfect for him but I suffered huge value loss. I didn't want someone else to blame me for the sell in future so had to keep it clear and transparent.

Next purchase was at a nearby Toyota dealer - a preowned Camry. Served me perfect. It came with warranty, no issues about anything and only when I returned to India for good, I sold it to my close friend and he inherited that peace of mind from me :)

There are more horror stories and learning from my overseas tenure but I will keep that for some other thread instead of taking topic off the course.

Great Thread ! Thanks a ton for compiling this to-do list. This is of immense use to me.

A couple of questions :

1. From the day we land at US, Roughly how much time (Months / days) does it take to get the SSN, Driving License, First Credit Card, assuming one is prompt about applying for the same.

2. What are the options to use in the mean while, I.E. Assuming the above takes about a month or two (too optimistic ?? ) what are some of the options for us to use to get to work etc. Rental / Uber / Public Transport ?

After first time landing in states, wait for a week to apply for a SSN. Generally comes within a week after application. For more details, please visit immihelp site. This is very detailed there and will be off topic here.

Driving license has various steps to it. You can get it anything between one week to infinite time. Every state has different ways to take test. Visit the respective DMV sites. Generally you need to go through a Drug and Alcohol test, Written Test and Behind the Wheel test in the orderly fashion. Most of the folks fail in behind the wheel test. The situation presented could be test tracks or in certain scenarios, controlled but live traffic.

Credit card - again off topic. You can always get the bank account as soon as you have SSN. Some banks allow you to open the account on the pre-text of submitting SSN in two-three weeks. You can get a secured credit card or have one of you relative/ friend get add-on card for you so that their credit history becomes yours :D This needs SSN to be submitted though.

In general within a month or two you can "settle" these things.

Indian driving licenses are valid in USA if they are in english. Rental companies do provide you rental cars with insurance. The cost could be anything between 25$ to 80$ depending on size of rental/ deal if you get any and duration and coverage you opt for. Ensure you understand the local laws like driving with phone/ stop signs etc before you do this.

Off course they have Uber, Taxi and some places excellent public transport. To get to work on daily basis, a good friend who can pick you and drop back at home is perfect. So make some friends and return the favour when you are settled.

Great article! Very thorough and well researched.
Couple of points I would like to add:

1. Please consider AAA for auto insurance. They don't advertise aggressively, so they are not well known. But they offer lower rates than most competitors and very friendly service.
2. Also consider taking a AAA Emergency Roadside Assistance program membership. Annual fees are very reasonable for the kind of service they provide. Even if you need to use them only once in the year, it will most likely pay for 3-4 years of membership. This is even more important if you are going for a used car. Getting a car towed in US is exorbitantly expensive.
3. Many employers provide a low-interest/no-interest initial settling-in loan. Use this to purchase a nice used car. In the US, cars depreciate very fast and you can get very good cars at affordable prices. Drive this used car for a year or so, until you have built up your credit score enough to get a good auto-loan.

A few additions, as far as I know most states will have the practical part of your Driving license test done in normal traffic. They take you out into the normal traffic wherever the local DMV happens to be. My test took 4-5 minutes, but my wife’s about 35 minutes, both in Kansas at the same DMV office.

Although I had (two) international driving licenses, my car insurance company (StateFarm) insisted both my wife and I got our USA DL’s within 90 days of being and insuring the car.

I was advised to take out a car loan, rather then pay cash. If you are employed with a regular income, you should be able to secure a car loan quite easily as the car, obviously, is the collateral. Make sure you keep the payments up, the interest is likely to be considerable better than on a credit card and you are building up your credit rating history (as long as you keep the payments up obviously)

The state inspection various hugely state by state. There might be the initial inspection when a (secondhand) car is brought into a state. In Kansas it took about 3-4 minutes and was mostly verifying the car’s papers against the VIN, not much more. But most states have a yearly or some bi-annual safety and or emission inspection. Sort of the European MOT equivalent.

We lived in Missouri most of the time, which has a bi-annual inspection. It cost about USD20, so go figure how much inspection can be done for that. About 10-12 minutes, plus 5 minute admin at most.

https://en.wikipedia.org/wiki/Vehicl..._United_States

At some point in time as a car owner you are likely to be in contact with the DMV. It is easily, by far most, universally, hated organisation in the USA. You will have to deal with them for your DL, when you buy and or bring a second hand car into a state etc.

https://www.quora.com/Why-do-DMV-off...tion-in-the-US

I had to visit the DMV office in Kansas City several times and it wasn’t unusual to spend 3-4 hours waiting. In those days you could not do anything online either! A month before we left the USA, they upgraded their computers system and the delays got so bad the delays in the queus went from hours to days!

https://20poundsofheadlines.wordpres...uter-problems/

Having said all of that, in general anything to do with cars, other then the DMV, is extremely well organised and quick. You can still walk into any dealer in the USA and leave an hour later in your brand new, or second hand car. Registered, insured, paid for everything.

apperently

A few points from my side

1. If this is the first time you are living in the U.S. and you haven't driven here before, please get a used car first if you're still learning to drive. There maybe (god forbid) a fender bender here or there and that would make you feel quite sad. If you don't have good Indian driving experience, it's much better to join a driver-ed class there. Driving in America is very different from driving in India.

2. Insurance needs to be well-thought out. You have quite a few options but as the OP mentioned, they come at a significant premium. AAA is a good option but you can get comparative rates and play the game there as well.

3. When you buy your car, the first thing you need to put together or buy is a safety / survival kit. Weather changes quickly and things can go from good to bad to worse within a few hours. Especially if you have kids, always have some food in the car, warm clothing, emergency lights / power etc. There are kits available at local stores which provide a nice adequate package.

4. If your car doesn't come with a built-in GPS, get a used Navigation unit online from Ebay. This is because as most new drivers, we would be talking to people for directions but that means we may lose connectivity or GPS abilities over phone. It's better to have the two separate at least the first year of driving. GPS is quite accurate in the US if you put in the right settings up front

Some more things on Driver's License.

Some states allow taking driving tests from a recognized driving institutes. Colorado is one among them. I took the test from a local driving institute, its fairly easy if you have previous driving practice. They give you a certificate, take the certificate to the DMV and voila you have the driver's license the same day. The whole procedure took me 2 days. One for the test and one for DMV.

I have found that many are not aware of this and end up taking multiple driving tests at DMV as they are fairly strict.

But remember, this is only for driving tests. You still have to take the written at the DMV which is also fairly easy and they publish handbooks to prepare for the test.

Very Nice thread indeed. You have cover almost all the points on buying/owning a car in US. I my self went by DCU ( Digital federal credit union ) and i should mention how hassle free it was getting a loan from them. Auto loan, credit card, checking account, saving account all with single phone call :thumbs up

Things have improved a lot at various DMVs since then. Many DMVs let you even book an appointment online, which immensely cuts down your wait time.