Building credit in the United States is crucial, as it provides access to loans with better terms and interest rates, opens up opportunities to obtain advantageous credit cards, makes it easier to rent real estate, can positively influence job opportunities and insurance premiums, in addition to simplify financial transactions and avoid security deposits. In this blog we will cover the steps to build credit.
DOES BUYING A FINANCED CAR HELP BUILDING CREDIT IN THE US?
Buying a car in the US can be an early step towards building credit for a few specific reasons:
Affordable loan: Buying a car often requires financing, and lenders are more willing to offer car loans to people with limited or no credit. This is because auto loans are often secured by the vehicle itself, which reduces the risk for the lender.
Loan Duration: Car loans generally have shorter repayment terms compared to other types of loans such as mortgages. This means that you can build credit in a relatively short period of time.
Smaller Loan Amount: Auto loans are often lower in value compared to larger loans like mortgages. This makes the payment of installments more feasible, facilitating the fulfillment of financial obligations.
Credit diversity: By financing a car purchase, you will be diversifying your credit portfolio, which is beneficial for building your credit history. Having different types of credit, such as car loans and credit cards, can improve your credit score.
Consistent payments: Making your monthly car loan payments on time and on schedule demonstrates financial responsibility, an important factor for lenders when evaluating your credit profile.
STEP BY STEP TO BUY A CAR AND START BUILDING CREDIT IN THE UNITED STATES
1- Minimum requirements: To apply for funding, you must meet some minimum requirements, which include:
a) Valid passport.
b) Proof of residency in Florida. This proof can be the correspondence of the LLC (Limited Liability Company) created in Florida.
c) The last three bank statements of the customer. These statements can be from the customer’s bank in Brazil or the United States.
d) ITIN Number (Individual Taxpayer Identification Number) – important for foreigners without a Social Security Number.
2- Car choice: OneWorld International Partners will be able to indicate some suppliers for you to choose the car model that suits you best.
3- Entry information: After selecting the desired car, you will inform the amount you intend to pay as entry. This information is important for the concessionaire, as it will be used in the financing request. This value is usually around 20%.
4- Financing options: The dealership works with different banks, each with its own rules and criteria. The seller will review the information you have provided and decide which bank is best suited for closing, taking into account the requirements of each financial institution. It is important to highlight that the rules and requirements may vary according to the chosen bank and your financial situation. Initially, the interest for foreigners may be higher, over time, however, they tend to reduce significantly.
5- Registration: You will have the option to register the car as an individual or legal entity. The vehicle must be financed in the name of the customer (as an individual), but may be registered with his LLC (Limited Liability Company). This approach will help both your personal and business credit, linking the EIN (Employer Identification Number) and ITIN (Individual Taxpayer Identification Number) in the process, the registration can be carried out one week after the purchase.
6- Full Insurance: It will be mandatory to take out full insurance for the vehicle. This way, you will be protected in case of accidents, theft or other harmful events.
7- Lienholder in the Policy: The Lienholder, that is, the financial institution that grants the financing, must be included in the insurance policy. This ensures that the Lienholder is also protected in case of claims that may affect the vehicle.
NOTES ON THE PROCESS:
The purchase of the car will be done electronically. You may purchase as an LLC or as an individual. When choosing to buy your car via LLC you will have a manager at the Florida LLC who will be responsible for resolving any issue related to the vehicle and the BVM (department equivalent to DETRAN). If you make the purchase option as an individual, you will need to leave a power of attorney on behalf of our administrative agent. This power of attorney will allow the agent to resolve any issues with the car, should the need arise.
Both options offer solutions to ensure agility and efficiency in resolving issues related to the car you purchased. You will be able to choose the option that best suits your needs and preferences during the purchase process.
After purchasing the car, it will be possible to generate passive income by leasing the vehicle.
If you are interested, we can discuss this topic in more detail.
