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I live in Washington state and want to lease a car from Subaru. I work for Microsoft, have decent income and good credit score (~718). I'm in US for a bit more that 1 year on an H-1B visa and I'm in a process of getting the green card.

Many of my colleagues who arrived much later got car financing (like 5-year 0% APR from Nissan) and some got mortgages.

When I went to a dealer to lease a car, the car maker's bank asked for lots of documents including my visa approval forms (I-797). Then they wanted a letter from Microsoft, stating that guarantee they will renew my visa once it expires. I got that letter too. In the end, they told the dealer that they would not accept form I-797B need form I-797A. Those forms are the same and are mutually exclusive. The only differ by the place where the person applied for the H-1B visa (A for applying from inside US and B for applying from outside). The only way for me to get the I-797A instead of I-797B would have been to lie to the consulate, get a non-immigrant visa (tourist B1 or student F1) and then apply for the H-1B after I enter the US.

In the end, the Subaru financing did not bulge and refused to lease me a car even if I paid the full amount outright.

What's wrong with the auto financing?

I could buy the full car outright with cash. I could pay for the full lease outright. I have credit cards from the same Chase bank, that Subaru uses, that would allow me to buy the full car outright. Banks are willing to give $700,000 mortgages to people on visa who've been in US for less than a year. Yet, they refuse me something as small as car lease.

Is there any rational explanation for why car leases are so special?

Is there any way to work around this?

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    I have encountered many such silly cases, where employees of companies in the US follow their defined procedures without applying two cents of brain. There is probably no more reason to the behavior. – Aganju Nov 13 '16 at 11:37
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    Note: It is almost impossible to buy a car with credit cards. The dealer doesn't want to pay the transaction fee. – mhoran_psprep Nov 13 '16 at 12:50
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    Risk. First, a car is a depreciating asset compared to a house, which appreciates in value. Secondly, you are less likely to choose to leave the country if you own a home. Thirdly, if you are somehow forced to leave the country due to a visa issue, the bank would rather be stuck with a house than a car. – Brandon Nov 13 '16 at 19:49
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    Side note: Go to a different dealer. – gef05 Nov 14 '16 at 8:57
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    Side note: you just avoided getting a lease. Kudos @FiveBagger's answer. – Mindwin Nov 14 '16 at 11:23
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Uh, you want to lease a car through a dealer? That is the worst possible way to obtain a car. Dealers love leases because it allows them to sell a car for an unnegotiated price and to hide additional fees. It's the most profitable kind of sale for them.

The best option would be to buy a used car off of Craigslist or eBay, then sell it again the same way when you leave. If you sell the car for what you paid, then you get the car for a year for free.

If you are determined to go through with the expensive, risky and annoying plan of leasing a car, then you should use a leasing agent.

I recommend reading some car buying guides before going out into the wilderness with the tigers and bears.


Comment on Leasing Tricks

Don't get tricked by the "interest rate" game. The whole interest thing is just a distraction to trick you into think you are getting some kind of reasonable deal.

The leasing company makes most of their money from fees. For example, if you get into an accident it is a big payday for them. The average person thinks they will never get into an accident, but the reality is that most people get into an accident sooner or later. They also collect big penalties for "maintenance failures". Forget to change the oil? BOOM! money. Forget to comply with manufacture recall? BOOM! more money. Forget to do the annual service? BOOM! more money. Scratch the car? BOOM! more money. The original car mats are missing? BOOM! you just paid $400 for a set of mats that cost the leasing company $25 bucks.

The leasing company is counting on the fact that 99% of people will not maintain the car correctly or will damage it in some way. They also usually have all kinds of other bogus fees, so-called "walk-away fees", "disposition fees", "initiation fees". Whatever they think they can get away with.

The whole system is calculated to screw you.

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    "expensive, risky and annoying plan of leasing a car" - can you please expand on that? I prefer 0.72% APR loans to 3.45% APR ones and to giving up positive 3-year interest by paying cash. "you should use a leasing agent" - would that allow me to lease at the rates comparable to the automaker's terms? – Ark-kun Nov 13 '16 at 4:02
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    The dealer's "0.72% APR" is just a 5% APR loan combined with the discount they would have given you if you purchased the vehicle with cash. – R.. Nov 13 '16 at 4:29
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    Expensive because you are leasing a new car, and so the cost of the lease includes the instant depreciation when you drive it off the lot. (Just like buying a new car.) You will also have to keep expensive collision & comprehensive insurance coverage, instead of just liability. You're far better off financially buying something used that 1) you can pay cash for; and 2) you can pay cash to replace if it breaks. – jamesqf Nov 13 '16 at 4:35
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    If you think a leasing from a dealer is the cheapest option, it just shows how thoroughly the dealer has tricked you. You probably haven't even talked to a leasing agent have you? I bet you just went to the first new car dealer you saw and stayed there. – Five Bagger Nov 13 '16 at 13:31
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    @Ark-kun: I think you missed the point. The cheapest alternative is not to buy or lease a new car. E.g. you pay $25K for the new car plus loan & insurance costs, or you pay say $5K for a used car, without financing or C&C insurance. Which costs you more? – jamesqf Nov 13 '16 at 18:26
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When getting a car always start with your bank or credit union. They are very likely to offer better loan rate than the dealer. Because you start there you have a data point so you can tell if the dealer is giving you a good rate.

Having the loan approved before going to the dealer allows you to negotiate the best deal for the purchase price for the car. When you are negotiating price, length of loan, down payment, and trade in it can get very confusing to determine if the deal is a good one. Sometimes you can also get a bigger rebate or discount because to the dealer you are paying cash.

The general advice is that a lease for the average consumer is a bad deal. You are paying for the most expensive months, and at the end of the lease you don't have a car. With a loan you keep the car after you are done paying for it.

Another reason to avoid the lease. It allows you to purchase a car that is two or three years old. These are the ones that just came off lease.

I am not a car dealer, and I have never needed a work visa, but I think their concern is that there is a greater risk of you not being in the country for the entire period of the lease.

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    "at the end of the lease you don't have a car" - this looks like a very common misconception. At the end of the lease you can buy back the car for its residual value or sometimes even trade it in for more. "When getting a car always start with your bank or credit union. They are very likely to offer better loan rate than the dealer." - I agree about the loan, but for special financing like 0% APR or lease, there is no choice. There is a single bank that can underwrite those. My credit union would never give me a 0% APR loan. – Ark-kun Nov 15 '16 at 1:20
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In the U.S., most car dealers provide lease financing through one company (usually a subsidiary of the auto manufacturer).

Whereas they provide loan financing through a variety of companies, some of whom offer very high interest rate loans and sell the loans as collateralized debt obligations (CDOs).

Have you checked whether Chase or First Tech Credit Union offers a suitable car lease?

  • First Tech gave the dealer something like 3.45% APR for 6 years which might be an OK APR for my current situation. I'd also have to pay the taxes for the full price of the car. The lease for 3 year has MoneyFactor=0.0003 and Residual of 62% resulting in 0.72% APR. The interest payments differ tremendously. – Ark-kun Nov 13 '16 at 2:30

protected by GS - Apologise to Monica Nov 14 '16 at 11:06

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