One million international students come to the U.S. to study each year, and those who want to buy a car get a lesson in cross-border payments friction. Payments are often made with cash and, upon graduation, their parents must sell the vehicle from halfway across the world. In the March X-Border Receivables Report, Volvo’s VP of sales, Rick Bryant, tells PYMNTS how the automaker has solved this problem by giving its car leasing program a cross-border tune-up.
From finding the right model to haggling with the dealership over an acceptable price, buying a car is nothing short of a hassle. As challenging as the process is for U.S. consumers, it’s even worse for those outside of the country who are trying to manage it for U.S.-based family members.
Buying and selling a vehicle from across international borders only adds layers of complexity to the arrangement, something that is particularly true for parents whose children are pursuing education opportunities overseas. To lessen the pain, automaker Volvo launched a program last year to give such students easier access to a set of wheels, and to give their parents an easier means of paying for the auto leases.
Volvo’s International Student Program allows parents to lease a new vehicle from the company by making a one-time payment to a local dealership. According to Rick Bryant, vice president of sales operations at Volvo Car USA, the program makes vehicle leasing simpler for international students’ families by also offering bundled auto insurance and maintenance. He recently spoke with PYMNTS about how the program works to eliminate common auto leasing pain points.
International Car Shopping 101
Navigating the car shopping experience can be difficult for overseas families interested in buying a vehicle in the U.S. – and even more so when international students are entrusted to buy the vehicle themselves, Bryant said.
“When a student comes over here, they’re probably not particularly savvy at car shopping,” he explained.
In fact, it’s common to see international students walk into dealerships carrying large sums of cash – between $50,000 and $70,000 in their local currencies – to buy a vehicle. Receiving and making cash payments can be intimidating for students attempting to buy cars, Bryant said. It can also create challenges for dealerships, which must then convert foreign currency and report such transactions to the government.
The troubles don’t end at the purchase of a car, however. Further down the road, international students’ families must remotely deal with offloading the vehicle once the student graduates and returns home.
“Parents are left with an asset on foreign soil that they have to figure out a way to dispose of,” Bryant said.
The Cross-Border Leasing Solution
Leasing could offer international students and their families more convenient and temporary access to a vehicle while the student is studying abroad. The family only pays for a portion of the vehicle’s value during the terms of the lease and can easily walk away when the contract expires.
But, Bryant noted, many dealerships are reluctant to lease to overseas students, especially those without an established U.S. credit history or some form of guarantee that the lessee intends to remain in the country for a long time.
“[As] they don’t have U.S. citizenship, leasing is very difficult because they’re a flight risk, quite frankly,” Bryant said.
Volvo’s International Student Program is intended to make vehicle leasing simpler for both students and their families, and alleviate the pressures of receiving large sums of cash, using it to pay a foreign car dealership and selling a vehicle after graduation. To be eligible for the program, students must have a valid driver’s license from their country of origin, a valid passport and documentation to confirm their enrollment in a U.S. school.
The program also intends to offer relief to parents who are making international lease payments. It enables them to make a one-time international payment using the Flywire payment platform, which many are already using to deliver tuition payments to the colleges and universities their children attend. The platform provides a familiar environment for these users when making payments to U.S.-based car dealerships, and allows them to make the payments in their local currencies, too.
“We wanted to make it as painless as possible for a foreign parent to provide transportation for their child while they’re studying here,” Bryant said. “They can pay through Flywire in the exact same way that they pay for tuition.”
Packaging Additional Vehicle Expenses
In addition to helping international students and parents obtain quicker access to a vehicle, Bryant said the program also aims to help these families access insurance and other vehicle-related expenses. Volvo has a partnership with Liberty Mutual and bundles its insurance rates, applicable taxes and maintenance fees into customers’ final bills.
“We’ve bundled everything in,” Bryant explained. “The only thing they have to do is put gas in the car and bring it in for maintenance.”
By offering auto insurance and vehicle leasing as a bundled package, Volvo aims to help international students avoid the complicated rules governing auto insurance purchase.
“Insurance laws are very difficult in the U.S. because they’re state-by-state and they’re heavily regulated,” Bryant said.
While Volvo offers Liberty Mutual insurance, the company is required to inform students that they can shop elsewhere for coverage.
Expanding Volvo’s Reach
The number of international students attending colleges and universities reached 1.08 million during the 2016-2017 academic year, according to the most recent data from the U.S. Department of State Bureau of Educational and Cultural Affairs. That number represents an all-time high after 11 years of consecutive growth.
With more than one million students traveling to the U.S. for higher education, the market for selling or leasing vehicles to overseas families is rich for automakers and dealerships, Bryant said.
The International Student Program launched last year, and he is hopeful that Volvo’s partnership with Flywire will raise the program’s profile among overseas families with students enrolled in U.S. colleges and universities. If successful, it could help Volvo reach new consumers at an early age and encourage them to become Volvo drivers again when they are ready to purchase another set of wheels later in life.
Bryant sees the program as a subscription service, similar to the company’s Care By Volvo offering. Like the International Student Program, Care By Volvo includes access to a car, insurance, maintenance and other expenses, all for a monthly subscription fee.
“My hope is that it catches on and creates young people who are interested in driving a Volvo that end up being customers for life,” he said.
The program may serve the additional benefit of sparing overseas families from getting a crash course in U.S. car shopping and selling. Students can instead focus on their studies and, upon graduation, return home without the hassle of international car ownership.
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