Buying That First Car

By Crystal Kassab Jabiro

As immigrants and refugees acclimate to American life, they quickly discover that reliable transportation will majorly impact their quality of life. In most parts of the United States, especially in suburban and rural areas, a car is essential for work and school commutes as well as for everyday living, like grocery shopping. Before buying that first car, newcomers must obtain a driver’s license. Having a driver’s license from another country does not automatically allow you driving rights in the US, and every state sets their own conditions.

In Michigan, for example, foreigners may legally and temporarily drive if their home country license is in English or provides an English translation, and if they can provide proof of their legal presence in Michigan. Newcomers are encouraged to obtain a Michigan Driver’s License as soon as they establish residency, and they must show proof of the following: a Social Security Number, legal presence, identity, and Michigan residency.

Of course, the applicant must pass a written test. Michigan’s Secretary of State offers the knowledge test in multiple languages, including Arabic. People also must pass the road test, and once they obtain a driver’s license, , the next logical step is acquiring a vehicle.

It may not be as easy as it sounds, however - a car comes with a lot of expenses!

Not only does one have to have money to buy or lease a car, but he or she also must have good credit if they’re purchasing from a dealership. Immigrants and refugees do not have established credit in the US and must either use cash (if they have it) or have a co-signer.

Car broker Byron Bahoura of S & P Auto in Sterling Heights, Michigan, likened the process to 18-year-olds getting their first cars as legal adults.

“When people don’t have credit, and financing expects a 700-credit score, it’s hard to get approved,” Bahoura claimed. “That’s why they’ll typically need a co-signer. Young people usually have their parents. So it’s the same with newcomers– they will need somebody to co-sign for them to help build their credit.”

In his professional opinion, Bahoura suggests leasing first as there are always some sorts of rebates. That may be a good deal for those who can afford a new car every three years, but it may not be a good deal for cost-conscious buyers in the long run. As far as used cars go, if buying from a dealership he cautions potential buyers about the high interest associated with no or low credit scores. Private sales are another matter.

That is why first, a buyer/lessee must assess the purpose that car will serve to make a decision about what kind of car would best suit their needs. Is it just for work or is it for the whole family? Will it be shared? Is it safe in the winter, and how much mileage per gallon does it get? These are important questions to ask, especially when it comes to safety and expenditures.

Then, with a new car comes another new expense – insurance. Those who have never had their own insurance before can expect to pay a high insurance rate for at least the first six months.

In order to get an insurance quote, the buyer/lessee must have a VIN (Vehicle Identification Number), and from there can compare prices with different companies to see which would be more affordable. Zip codes affect those rates; insurance companies set fees based on the risk factors of that location. They examine data that shows where and why residents file claims. In Michigan, everyone must have a no-fault policy.

Finally, it is time to choose the best car for the moment.

It is important to note that the list price is almost never what is paid at a dealership, and buyers should try to negotiate the purchase price, not the monthly payment.

Bahoura recommends people go to different banks and see what kinds of loans they could get. Even though it is hard to get financing as an immigrant or refugee, is it not wholly impossible. Credit unions typically give the best deals, whereas dealer financing is often higher. Not only do some banks offer special financing for newcomers, but also some community organizations can help. The Chaldean Community Foundation in Sterling Heights offers new immigrants access to transportation through the Michael J. George Chaldean Loan Fund. They provide auto loans of up to $15,000.

Purchasing a used car from a private seller is usually the cheapest way to go. Websites like www.cars.com and www.carvana.com, as well as Craigslist and Facebook Marketplace, offer a plethora of used cars. Buyers should get a vehicle history report, like a Carfax, that shows all the services and repairs done to that car. A buyer can also bring a car scanner, a handheld device that connects to most modern cars, that shows exactly what needs to be repaired to calculate costs. One can also pay an independent mechanic to do a full inspection of the car. A buyer should not expect to buy a used car that needs no repairs. A car less than 5 years old has depreciated already but still has a long life. The sale price of a used car can usually be negotiated down by 10%-20%.

The downside of buying a used car could be spending as much money on it as you would have on a newer car. It’s definitely a case of “buyer beware.” Newcomers should network with people who know about buying and leasing cars, and who can communicate more effectively than they can so they have a full understanding of what will likely be their first major purchase.

It’s always exciting to acquire that first car, no matter the circumstances. It is certainly more difficult as newcomers to get low-cost insurance and financing, but those beginning years are a steppingstone to financial freedom and success in America.

For more info on the Michael J. George Chaldean Loan Fund, visit www.chaldeanfoundation.org. Byron Bahoura can be reached at 586.615.5900.