3 Steps Immigrants Should Take When Getting Their First Car

8 MIN READ

In many parts of the United States, it’s essential to own a car. We’ve put together a comprehensive guide with all the information you need to get your license, get a car, and hit the road once you have arrived in the US.

Step 1: Get A Driver’s License

Once you have legal status in the US like an H-1B or F-1 visa, you are able to get a driver's license in most states. As of 2019, 13 states also allow immigrants of all statuses including undocumented immigrants to obtain drivers licenses. The process of obtaining a license as an immigrant is basically the same as it would be for a citizen but requires a bit of extra work.

Everyone applying for a DMV issued driver’s license is required to produce the following types of documentation:

Proof of Identity: Documentation with your name and date of birth. You should bring your passport with your visa. These are usually required for immigrants applying for a license
Proof of Residency: DMVs usually require two documents that prove you live in the state in which you are applying for a license. This could be a tax return, a lease agreement, mortgage documents, current utility bills, or another document in your name that shows a current address
Proof of Legal Status: In most states you will need an SSN to procure a driver’s license. Bring proof of your SSN and of your legal status in the US with you when you apply for your license.

Double check with your state’s Department of Transportation and local DMV about their requirements.

In order to get a license, you have to pass a written or “knowledge” test about driving rules and a road test in a car to show that you actually know how to drive. Here’s an example of a written test from California to give you a sense of what they will ask about driving rules and regulations. Many DMVs offer the written test in multiple languages if you prefer to take it in your native language. If you pass those two tests, you’re golden! You’ll take a picture, pay a fee, and get your new license.

Some states recognize International Driver’s Permits or the driver’s license from your home country and allow you to drive with those documents or be exempt from some of the above requirements. However, it’s super hard to get car insurance - which is required by law - without a US license so it’s best to get one if you plan on owning a car.

Step 2: Get A Car

Okay, you’ve got a license. Now you need a car.

Picking The Car Type

When you’re looking for a car, identify your needs and how much you are willing to spend. Do you need it just to get to and from work, or do you have a family that you need to drive around as well? What’s your budget? Once you have these worked out, you can start to put together a short-list of candidate cars.

Here are a few tips for understanding how to choose the best car:

How Much Can You Afford: Your monthly car payment shouldn’t be more than 10-15% of your pre-tax monthly income. Cars come with a bunch of other expenses like gas, insurance, and maintenance that you should take into account as well when putting together a budget
Make and Model: The make and model you need will depend on what you need out of the car. Do you need a lot of extra seats? Maybe you need a minivan. Do you only need a seat for yourself? A two-door coupe will probably work. The “make” of the car, the brand, will depend almost entirely on preference and the availability of cars from that company that satisfy your needs
Used vs. New: A new car can seem like a logical choice; it will be free of maintenance problems and won’t have any wear and tear. But new cars can also be very expensive. American used car markets are huge and have tons of great cars that are much cheaper than their new counterparts. You can find dealer-certified pre-owned vehicles at low cost from car dealerships and other private parties.
Lease vs. Buy: If you’re going to need the car for more than a few years, it’s probably cheaper to buy. Otherwise, you can get leases from local car dealerships. With a lease, you don’t actually own the car - it’s more like a long rental. Plus there are mileage caps that you must adhere to. Note that some dealerships do offer leases on used cars which can be much cheaper than for new cars. In addition, leases are notoriously full of hidden fees, so you might end up paying more for the lease than you would by buying a cheap used car

There are tons of great resources out there to help you search for and compare new and used cars based on price, quality, and specifications. Kelley Blue Book, Edmunds.com, and Consumer Reports are all excellent sites that will make the search process easier.

Where To Buy Your Car

Car dealerships are the obvious choice for both new and used cars. Sites like TrueCar will find your cars at dealerships near you. The used car market also extends to public forums like Facebook Marketplace and Craigslist. Buying from private individuals requires a bit of extra due diligence to verify the status of the car and transferring ownership, but can be a good option.

Paying Cash or Getting Financing

The simplest way to buy a car is with cash. Find the car you want, and pay the full amount in cash. No strings attached.

But not everyone has enough money lying around to buy a car off of the lot without a loan. Most people require an auto loan or another form of financing in order to be able to afford a car.

The general rule for auto financing is the “20/4/10 Rule”:

You should put down at least 20%. Usually the bigger the down payment, the smaller the interest rate
The term of the loan should be less than 4 years
The monthly payment for the car should ideally be 10% of your monthly income

It’s often harder to get financing as an immigrant, especially if you have no credit history, but it’s still possible. Dealerships and direct lenders are still an option, but you might be subject to higher than normal interest rates or get denied completely with a lack of credit history.

Services like International AutoSource that are geared towards auto financing for immigrants can be a great option. They work to make sure that even without a credit history you can still get reasonable auto loans.

Any financing option will require the following documentation:

Proof of identity
Your visa with the length of your stay in the US
A SSN or ITIN
Proof of residence, income and employment, and insurance
Vehicle information including the purchase price, the vehicle identification number (VIN), and the year, make, and model

Step 3: Get Insurance, Register Your Car, And Get It Inspected If Required

You Need To Be Insured In The US

Insurance is required for every US driver. In order to get a quote or buy a policy, you need a VIN for the vehicle being insured and a driver’s license.

Car insurance usually covers collisions, theft, and liability. Each state has specific coverage requirements, so be sure that the policy you get will satisfy them.

Rates for newly licensed US drivers - which immigrants usually are - are hard to predict. The cost of your policy depends on your credit score (or lack of) and any previous driving history. Generally, insurance is more expensive for newly licensed drivers and for those without credit. Finding insurers who charge by the mile - such as Metromile, choosing a higher deductible, or buying an older car that doesn’t require you to get collision or comprehensive insurance are all ways to secure a more affordable rate.

It’s always best to shop around to find the best deals, especially when buying your first plan. You can get quotes from multiple companies and then compare to see which one best fits your situation. This tool from NerdWallet is super helpful for comparing plans and rates.

Over time, if you don’t have any major incidents and build your credit, your rates will decrease.

Register Your Car

Every state in the US requires that a car is registered. Registration is documentation that you have paid registration taxes and fees on your car, and it gets you your license plate and registration documents.

Most states require that you register your car within a certain time period. Make sure you research the requirements in your state so you don’t get caught trying to register past the deadline.

Your local DMV will have all of the information you need about the required documentation needed for registration. This usually includes your license, proof of car insurance, and may require proof of a verified inspection. Once that is sorted out and you’ve paid the fee, your DMV will issue your license plate and registration documents. Registrations have to be renewed every year, so take note of how and when you should do this if you will own the car for over a year.

Get Your Car Inspected, If Required

Regular car inspections by state-authorized mechanics are often required and usually cover safety and emissions standards. In states with these requirements, you can’t register or renew registration on your car without a verified inspection. The requirements vary a lot between states, so make sure you understand what rules apply to your car.

Quick Tips For Driving + Car Ownership In The US

Regular maintenance can go a long way in avoiding inconvenient breakdowns and massive repair bills. Learning some of these skills yourself can save a lot of money on nuisance repair bills
Services like AAA provide driver benefits like emergency roadside assistance, trip planning, and insurance
Driving norms can vary a lot between states and regions. It might be worthwhile to do a bit of Googling to get a handle on driving in your area

Get Started