FAST AND EASY WAY TO DEVELOP CREDIT HISTORY, AND WHAT ASPECTS BANKS CONSIDER BEFORE DETERMINING WHETHER TO PROVIDE A LEASE. PART 1

RUS version here

Miami is the place where a large proportion of immigrants from other countries choose to settle after moving to the United States. This is why both the real estate and auto sales markets are growing so rapidly in that region. Even those who can afford a car are often confused about how they should buy it to save the most money. The number of purchasing options and the automaker's financial programs that cater to specific buying criteria can make it difficult for someone without a lot of special knowledge to select among them. Professionals are better equipped to choose the most appropriate solution for each situation.

A journalist from the Star Club magazine talks to an auto expert from PANAUTO MIAMI about how to get ready for a car purchase and how to build credit. Mr. Dmitry Chernyak, owner of PANAUTO MIAMI, explained how credit affects car buying and the first steps to take:

You must take your first steps properly when entering the land of opportunity, especially when spending money. If you are going to invest your money, you want to make sure it will bring the greatest benefit to you.

Time is of the essence! Within a few years of building your credit, you can take advantage of the country's financial system just like the natives do. You can get a mortgage for the same amount as rent but for your own house, or a car loan with as little as 0% interest.

CREDIT CARDS

Building your credit this way is the easiest and cheapest, but it is also the slowest. You must open "secured credit cards" with three to four banks. Most likely, you will not be approved for unsecured credit cards, so you start with those that are secured by your deposit. Simple - you give the bank your money, they put it in a special account, and issue a credit card for the same amount. Generally, the deposit is refunded to you in a year, and you will receive an unsecured credit card. Consider opening secured credit cards not for $100 each, but for much larger amounts ($1,000 - $3,000).

Why use 3 to 4 cards for large amounts? Due to the fact that other banks will see that you've been entrusted with loans from multiple banks, rather than just one, and for a fairly high amount. The bottom line: you have a good credit limit, a "revolving" credit history and several credit cards within a year! A credit account should be treated the same way. It is necessary to open a "secured credit line" and to build a second type of credit - the "Installment Loan". You will benefit from all of these steps when applying for a car loan or a mortgage.

When your first opened credit card (and therefore your credit history) reaches the age of 2 years, your credit will enter a new level.

CAR LOAN!

The fastest and easiest way to get bank approval. It is, however, not the cheapest. Americans have a saying: "You are always buying the first loan". Furthermore, it is not cheap simply because you are obtaining credit without establishing several years of credit history with your credit cards. To cover bank risks, you end up overpaying and paying higher interest rates.

Unlike with an ideal credit history, where your interest rate will range from 0% to 5% APR, your first car loan will start at 9%APR and can rise as high as 18% APR for a new vehicle, and from 12% to 27% APR for a used vehicle. You will need to make an initial down payment of $4,500 or more, depending on the vehicle's price, mileage, age, and condition.

CAR LEASING PROGRAM FOR FIRST TIME BUYERS FROM PANAUTO

You may want to consider leasing a Honda, Toyota, or Nissan car and building up your credit history with it. It will not be long before you can lease a higher-class car like a BMW, Lexus, MB, etc. Even though the lease term is much shorter than the loan term, First Time Buyer lease payments are substantially lower than installment loan payments. As you make payments over the lease term, the buyout price of the vehicle decreases proportionally. If you really like the car you are leasing, and you want to buy it, you can apply for a loan in a year, when your credit is strong enough, and get a 2.5%-8% APR.

Therefore:
- you will save $150-250% on lower monthly payments.
- you have three years to decide whether to keep this car in your possession or sell it.
- you won't lose the car's value in the event of an accident (the leasing company covers these risks).
- plus, you build a strong credit history.

We will tell our readers about a fourth way to build credit in the next issue, namely leasing a car without a Social Security number (premium brands), for those who are unable to wait for a SSN but desire to drive a premium car and have the funds to make a down payment. You can also read Dmitry's recommendations about important issues such as - unacceptable and necessary card transactions that impact credit history; those things that banks look at when approving a loan; the fact that leasing banks have different requirements for application consideration, and others. Stay tuned for the next issue and enjoy your trip!

To read chapter 2 click here