Car Loans for Foreigners In Japan: An Easy How-To Guide

If you live in a Japanese city, it’s unlikely that you need a car. But for those who live more out in the countryside, having a car is essential for travel.

Buying a car in Japan is a big investment, which is why getting a car loan is a practical way to finance it.

But with most Japanese processes, there is a lot of paperwork to be prepared for, which is why we have this guide on how to navigate getting a car loan for foreigners.

How do car loans work in Japan?

Car loans in Japan work similarly to other countries, with many different types. Here are the three main ones:

Bank loans 

Many major Japanese banks offer car loans. It’s mainly referred to as マイカーローン (My Car Loan). 

These usually have the lowest interest rates (often around 2% to 4%) and have the best terms and conditions.

However, they are usually the hardest to apply for as a foreigner, especially for those without Permanent Residency (PR) in Japan.

Car dealer loans

When you buy a car in Japan, you can typically get a loan from the car dealership.

These car dealer loans are through a Japanese finance company, like JACCS, Toyota Finance, etc. 

Many of these are easier to obtain, especially as a foreigner, but the interest rates are typically higher. Usually around 5% or more.

Specialty Loans/FinTech Loans: 

There are specialty loans in Japan that you can use as a car loan. These are more like fintech loans from companies like Global Mobility Service (GMS). 

They are a good option, especially for foreign residents or for those with poor credit history.

Their interest rates can range from 6.0% to 12.0% or more, depending on the screening process results and their bank partners.

What to look out for for car loans in Japan as a foreigner?

First, decide if you need a car. 

Most of the time, you’ll need a car if there isn’t much public transportation, like in the suburbs or in the countryside in Japan.

Then you need to look out for these factors when getting a car loan:

• Residence Status: When you have Permanent Residency (PR) in Japan, you are seen as less of a risk.

• Visa Duration: Many loan providers need to know the remaining visa period you have. 

• Language barrier: Legal documents, contract regulations, terms, and agreements will most likely be in Japanese. The loan company might refuse your application if you can not understand the paperwork or the process.

• Credit history: Having a good credit score is an important factor, as any previous delayed payment can hinder your application.

3 requirements to get a car loan in Japan

Car loan lenders in Japan check for stability and repayment ability. Here are the three requirements:

1. Long-term residence status: No short-term visa, and having a PR in Japan makes the process easier. 

2. Proof of stable income: Lenders might call your workplace to confirm your employment status.

3. Minimum annual income: varies depending on the car loan company. Some might require at least ¥2 million after tax with continuous employment.

Additionally, you will need a parking space for your car. So you need to obtain a garage certificate (shako shomeisho) as proof that you have a designated parking space.

What documents do I need to prepare for a car loan in Japan?

Here is what you need to prepare for a car loan application:

• Residence Card (zairyu card)

• Japanese Driver's License

• Proof of Income: like a withholding tax certificate or a tax return form

• Certificate of Employment

• A quote or estimate of a car purchase

• Seal Certificate (inkan shomeisho)

• Garage Certificate (shako shomeisho)

Japanese used cars vs new cars: what to know

Many think buying a used car in Japan might be worth it, but is it really?

For new Japanese cars, it’s usually best to have the newest safety and latest technology with a full factory warranty. When you buy it from a car dealership, there’s better financing with lower interest rates. But new cars do have a steeper cost and have higher depreciation loss when they are registered.

For used cars, they do have a cheaper purchase price. Depending on where you are purchasing from, there can be higher financing or interest rates. But the lower principal loan amount can offset that. 

The key is if you buy a used car, look for a nicely maintained used car from 2010 to now. It’ll likely have nice features that most cars will have. And look for domestic car brands, as it’ll be easier to fix in Japan.

Auto loan companies for foreigners to consider

SURUGA Bank

SURUGA Bank is one of the more recognizable foreigner-friendly banks with an "Auto loans for foreigners" service.

It does not require permanent residency. And the whole application process can be done online with multilingual support.

Key information:

• Interest Rate (APR): 6.0%, 9.0%, or 12.0% (Determined by screening)

• Usage Period (Max): Up to 10 years

You can also use their funds for other motor-related needs, like a motorcycle, getting a license, or vehicle inspections/costs.

Global Mobility Service (GMS) "Car Loan 4 All"

GMS is another common Japanese car loan company for foreigners. They do not require a guarantor or permanent residency. You will get the same rates as their Japanese applicants.

Key information:

• Interest Rate (APR): The amount is determined after screening or by their bank partner 

• Usage Period (Max): 5 years

Easy Car Ride

If you do have PR or a guarantor in Japan, but still want a foreigner-friendly car loan company, then check out Easy Car Ride. 

Depending on whether or not you have PR or a guarantor (or both), it’ll give you more financing options: 

• Interest Rate (APR): Not listed (Works with 4 loan companies)

• Usage Period: Up to 8 years (96 installments) without PR. Up to 10 years (120 installments) with PR or a guarantor.

They do have a stricter application where you need to have no outstanding debts.

SOMPO Japan

SOMPO Japan is a major Japanese insurance company with a fixed-rate car loan service. No guarantor is required for their application process.

Key information:

• Interest rate: 1.5% ~ 3.95%

• Repayment period: 6 months ~ 10 years

They also offer car insurance!

OTORON

For used cars specifically, consider OTORON. They offer an in-house financing option for their vehicles, usually with 0% interest rate! Though they do require a guarantor.

Key information:

• Interest rate: 0%

• Repayment period: up to 3 years

Frequently asked questions

Can foreigners get a car loan in Japan?

Yes. Foreigners in Japan can get car loans. While the requirements usually require having permanent residency, many foreign-friendly car loan companies will help you get a car in Japan.

Can I buy a car in Japan as a foreigner?

Yes, you can buy a car in Japan as a foreigner. The process does involve a little extra paper, such as getting a parking or garage certificate (shako shomeisho) or a car loan to help with financing. But there are no legal restrictions that prevent a foreigner from buying a Japanese car.

In closing

While getting a car loan in Japan as a foreigner can be stressful, once you have that secured, then you will be cruising in no time.