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      1. The White Paper for F1 Students
      2. F-1 Living in U.S.
      3. Driving

      F-1 Driving: How to Buy, Sell, and Rent a Car?

      This article provides international students with a practical guide to buying, selling, and renting a car in the U.S.?

      How to Buy a Car?

      Considerations

      • Budget: Start by setting a budget, which should include not only the price of the car but also associated costs for insurance, fuel, electricity (for electric vehicles), and maintenance.

      • Car Model: Choose a model based on your needs, such as an electric vehicle, SUV, sedan, or pickup truck. Note that insurance costs will vary depending on the model.

      • New or Used: Used cars are generally cheaper, but you should carefully inspect their condition. For electric vehicles, it is usually better to buy new ones. For gasoline cars, make sure to check for any accident history.

      Where to Buy?

      • Dealerships: While prices at dealerships are typically higher, they offer greater reliability and peace of mind. You can also try negotiating the price; it is often possible to get a few thousand dollars off or receive equivalent maintenance services as part of the deal.

      • Used Car Markets: Platforms such as CarMax, Craigslist, Facebook Marketplace, and cars.com offer the information of a wide range of used cars.

      • Social Media Platforms: You can find more affordable used cars through social media such as Facebook. However, these channels come with some risks, so it is advisable to bring a knowledgeable friend with you to inspect the car in person to avoid scams.

      Process

      • Payment: Choose your payment method, which can be a loan, cash, check, or transfer.

      • Contracts and Agreements: Carefully read all contracts and agreements to ensure you understand the terms, including any hidden fees or warranties.

      • Vehicle Registration and Insurance: For new cars, the dealer will handle registration. For private sales, you will need to go to the local Department of Motor Vehicles (DMV) to register the vehicle yourself and purchase the required insurance.

      • Obtaining a Car Title: A car title is a crucial document that proves your ownership of the vehicle. For new cars, the dealer will handle this process However, when buying a used car, you will need to obtain the title from the seller and transfer ownership to you.

      Leasing vs. Financing

      If you are not paying in full, you can choose between leasing and financing a car. Here is a comparison of the two options:

      1. Leasing

      This option is ideal for those who do not want to drive the same car for an extended period and prefer trying different vehicles.

      A contract term typically lasts 24 months or more. At the end of the lease, you can either return the car or purchase it. Ownership of the leased vehicle remains with the dealer, so you are essentially renting the car. Moreover, leased vehicles usually have annual mileage limits.

      End of Lease Options:

      • Return to Dealer: After inspection, you may need to pay for any excess wear and tear.

      • Purchase the Car: After inspection, the dealer will set a residual value if you decide to buy the vehicle.

      Pricing Considerations:

      • Start negotiating from the MSRP (Manufacturer’s Suggested Retail Price); in general, getting a 7% discount is considered good.

      • Your monthly lease payment should not exceed 1% of the MSRP.

      • If the total cost of leasing exceeds 50% of the MSRP, it might be better to finance the car since leasing involves interest and mileage restrictions.

       

      2. Financing

      This option is ideal for those who want to own a car long-term.

      A payment term usually ranges from 24 to 96 months. Unlike leasing, financing leads to car ownership once the loan is fully paid off. Until then, the car technically belongs to the dealer.

      Pricing Considerations:

      • Total cost = Down payment (which can be zero) + Loan amount (including interest).

      • Insurance costs for financing are generally lower than for leasing.

      • The residual value is determined by the market value at the end of the loan term.

      • Overall, monthly payments for financing are higher than for leasing.

      Advantages:

      • No mileage limits.

      • You can modify the car without restrictions.

      • Insurance costs are typically lower for financed cars compared to leased cars.

      Post-Purchase Steps

      • Vehicle Inspection and Registration: Some states require new car owners to complete a vehicle safety inspection and emissions test within a certain period after purchase.

      • Paying Sales Tax: When registering your vehicle, you may need to pay sales tax, which varies by state.

      • Obtaining License Plates: After completing all necessary paperwork and paying the required fees, you will receive your license plate.

       

      How to Sell a Car?

      Set a Price

      • Third-Party Valuation: You can use Kelley Blue Book and Edmunds to get an estimate of your car's value. You can also take it to CarMax for an appraisal; the benefit is that you can receive a check the same day, though the offer may be slightly lower.

      • Compare Similar Models: Check the prices of similar models and years on various platforms to see how they are being listed.

      Sales Process

      *Procedures may vary by state.

      • Title Transfer: This is the most crucial step. After selling the vehicle, you need to transfer ownership from yourself to the buyer. This typically involves filling out the buyer's information on the vehicle's title.

      • Bill of Sale: This document serves as proof that the transaction has been completed. It should include the vehicle information, sale price, and signatures from both parties.

      • Release of Liability: In some states, you must notify the state government that you have sold the vehicle, indicating that you are no longer responsible for it. This can be done by submitting a "Release of Liability" form.

      • Remove License Plates: In most cases, after selling the car, you should keep the license plates.

      • Cancel or Transfer Insurance: After the sale, contact your insurance company to either end or transfer the vehicle's insurance.

      • Payment Method: The safest methods are to request a bank transfer or accept a cashier's check from the buyer.

      • Handover: Once payment has been received and all documents have been completed and exchanged, you can hand over the vehicle to the buyer.

      • Tax Reporting: In some states, the sale of a personal vehicle may involve taxing. Consult an accountant or your local tax office for specific guidance.

       

      How to Rent a Car?

      Important Considerations

      • Age: Many car rental companies require drivers to be at least 25 years old. Some companies allow rentals for those 21 and older but may charge an additional fee.

      • Insurance: In the U.S., having insurance is mandatory when renting a car. Driving without insurance is illegal, so make sure to confirm whether the rental company includes insurance with the vehicle.

      • Rental Period: Consider how long you will need the car. Some rental companies offer discounts for long-term rentals, and you may be able to negotiate a better rate.

      • Companies: Popular rental companies include Hertz, Enterprise, and Expedia.

      Process

      • Online Reservation: Most rental companies allow you to book a car online.

      • Price Comparison: Use multiple platforms to compare prices from different rental companies.

      • Pick-Up and Drop-Off: Pay attention to the pick-up and drop-off times to avoid extra fees. If you return the car after business hours, you can usually leave the keys in a designated drop box.

      Rental Car Insurance

      When renting a car, you may need to consider the following insurance options:

      • LDW/CDW (Loss/Collision Damage Waiver)

      • LIS (Liability Insurance Supplement)

      • PAI (Personal Accident Insurance)

      • PEC (Personal Effects Coverage)

      Generally, you do not need to purchase full insurance from the rental company if you already have insurance or if your credit card offers rental car insurance coverage.

      VISA, MasterCard, Discover, and other major credit cards often include CDW/LDW coverage at no additional cost. However, this coverage is typically secondary or supplemental. This means that if you have your own auto insurance with LDW/CDW coverage, your insurance company will pay first in the event of a claim. If the claim exceeds your insurance policy’s maximum limit, the credit card’s coverage will then step in to cover the remaining payment.

      Most common credit cards offer similar rental car insurance benefits, so it is a good idea to contact your credit card company before renting a car to review the specific benefits available to you.

      Major Car Rental Companies

      Reviews provided by GoElite students

      Enterprise Group

      • National: A premium brand with excellent service, fewer crowds, and newer models, making it ideal for business rentals.

      • Enterprise: More affordable than National and more cost-effective.

      • Alamo: Offers periodic discounts, but service is average. Some students have reported unexplained additional charges.

      Avis Group

      • Avis: Not very affordable, but it offers a wide selection of vehicles. Service is average, though students often find special deals.

      • Budget: Has a wide range of pick-up locations, but service reviews are mixed.

      Hertz Group

      • Dollar: Relatively affordable, with competitive rates for low long-term rental.

      • Thrifty: Low prices, but service is average.

      • Hertz: Expensive for daily rentals but offers good value for long-term rentals. It has many locations and a wide variety of vehicles, suitable for short trips.

      • Ace: Average in terms of pricing, service, and vehicle selection.