Or what is needed to buy a car as a foreigner in the USA: the steps to take before you can drive your own car.

1.Ask yourself: do I really need it?

We bought a car after realizing that hitchhiking is not very popular, and you could pass as a homeless rather than a hitchhiker. Second option, renting a car, was really nice. For about $1400 we could have had a car for a couple of months, at least according to the online quotes. All looked fine until we contacted several companies to get quotes and try to actually book a car. That’s when the problems started:
-you can’t rent a car without a credit card (not debit card) – we don’t have one!
-but wait, they say you can with a debit card and credit check! of course, but only if you live in the USA (own a US driver’s license)
-well, let’s try to use someone else’s credit card: not possible – it has to be in driver’s name.
Conclusion: the renting companies (like Enterprise, Dollar, Hertz, Sixt, etc.) would rent only with credit card.ย This is when we got our answer to the question: yes, we need to buy one!

2. Read online about the potential problems YOU might have

Is your driver’s license valid? Can you drive? Can you get insurance? After reading several online articles from people who did it, we realized that the main problem for us might be the insurance. The insurance companies require you to have a US address, or US driver’s license, or, the problem that we had in all cases: wouldn’t make an insurance policy for less than 6 months or a whole year. Several calls or emails exchanged with various insurance companies just validated our concern.
How we went around this: the big insurance companies you find online don’t bother with small policies, so you shouldn’t bother either. Most states only require liability insurance at minimum, and you can easily get this from a small insurance company on the street.
We went from one office to another trying to find one company to suit our needs: cheap, short term (2months), foreign driver’s license, no questions about the address in US. Found several companies who could help us: some with a down payment of about $100 and then about 50$ per month ($250 for 2 months), others with a monthly fee of about $140 per month and no down payment ($280/2 months), and the one we went with: AALL – $71 per month and no down payment. So we have our insurance for 2 months with only $142 – and a very pleasant customer service in a more distant suburb of Phoenix, AZ.
Attention, though! The insurance is more costly the newer the vehicle is. The prices also vary with the type of vehicle (SUV/sedan/truck/etc.)

3. Budget

Car dealers sell used cars starting with as low as $1500 but usually from $2200 up. For this money they give you a car worth about $1000 and take care of the paperwork for you (and probably give you some warranty too).
We chose to go lower than that, so kept an eye on Craiglist. Most cars selling for $500 are damaged and need to be towed, and they go the same way until about $1200, where you might find a working one. We found ours for $1000 advertised as: “good engine, clear title, drives and works fine with minor things not working”. I called about 10 people for more details but most of the cars had hidden caveats we couldn’t pass – most overheating, or leaking oil, or broken transmission. Worth spent money on the phone calls. I won’t give you advice about how much to spend on a car. An expensive car isn’t always one that’s reliable, or with good fuel efficiency. One thing that’s worth mentioning is that the cars in US are not very well maintained: so more often you’ll find cars running with the same oil for years, or with minor fails easy to fix.

4. Paperwork

On a strong note, before jumping to anything, read first the necessary paperwork from the source: http://www.dmv.org/
because it varies a little from state to state. I will further describe the process for Arizona.
What the DMV site says you need for a car:
-The bill of sale.
-The completed vehicle title.
-The Title and Registration Application (Form 96-0236).
-Lien release documents, if applicable.
-A level I inspection IF the vehicle registration is missing.
-Payment for the fees and taxes:
-Title fee: $4
-Registration fee: $8.
-Air-quality research fee: $1.50.
-Vehicle license tax (VLT): Based on purchase price.

Later edit:
We learnt a bit more after selling the car in California. This state is unlike no other, so when you buy a car there, it needs to come with a smog certificate unless the car is no more than 4 years old (it’s the responsibility of the previous owner, and costs about $60) and an official odometer reading if the vehicle is less than 10 years old – read more on the DMV site for California) There are other exceptions too.

What you really need, assuming the title is clean, and the seller comes with you to a DMV office:
– ID (and possibly driver’s license)
– money to pay the taxes (for a car worth $1000, I paid a total of $59 for all taxes and new license plates).
And at this point you get your new license plates and need only the car insurance to be allowed to drive. You might find a car insurance office right by the DMV desk, but if not, a common practice is to arrange a contract with the insurance company you want and as soon as you get the title, you call the person to fill up the insurance policy for the vehicle. At this point, you can drive the car even without having the insurance paper in your hand.

So far, we paid for the car, taxes and everything extra a little less than $1400. Renting a compact or economic car for a month from Enterprise @Phoenix airport costs $1430. With a bit of care, this car we bought will drive us more than two months and we’ll still have it.

IMPORTANT tips:

1.make sure that the emission sticker on the vehicle license plate covers at least the period you want to drive the car, or else you’ll have to take the car to the inspection and pay some more money (and it may fail, especially if it’s an older vehicle).

2.if the insurance company asks about your address in USA, just give them a random (but verified to be valid) address. You can say you live with your friends there if they ask questions. If they ask for a proof for that address, find another company – they don’t want you.

3.it’s hard to find all the problems with a car from one short drive, especially if you don’t know what to look for. Basic rule: if the “Check engine soon”/”Service soon” light is on, don’t buy the car, whatever the owner says about it. If it’s an easy fix, he would have done it. If not, you’ll either drive the car to its death, or be stuck with it, unable to resell it.

4.things to check on a used car are all over the internet, make sure you know what to look for. But if you know what car you’re buying, check online for common problems of that car before going to test it. Look for factory recall issues too – it may fail again.

5.expect to put some more money into the used car you just bought. The more you drive the more you discover things that fail (we changed the tires with a better used set, added brake fluid, power steering fluid, replaced some fuses, bought some cleaning products, fixed a cracked windshield tank, and probably soon we’ll replace some pricey electronics)