How To Borrow Abroad | Payday Loan
February 1, 2019
The obstacles that await you
For those seeking to obtain a loan abroad, the obstacles are many and usually end up rejecting the best wishes.
Difficult to find information
First of all, you have to be able to find the information. Which country should we turn to? What are the formalities to accomplish? How to find a reliable interlocutor?
The Internet does not easily answer these questions, proof that the practice has not been democratized.
Brokers, on the other hand, are only rarely aware of the mechanics of credit arrangements abroad.
Regulatory Issue for Non-Residents
Some countries easily open accounts for non-residents, such as Switzerland or Luxembourg, but the access conditions may not be right for you, as the entrance fee is rather high. It is usually not easy to open a bank account without a work contract or a residence permit.
The language barrier
Other “natural” obstacles await you as the language barrier if you are speaking to a non-French speaking country. You will have to master English. But imagine an interview conducted in Madrid in English with a loan agreement written in Spanish. Hard to find more complicated.
Things become easier if you have dual nationality and you master the language.
Also think that you will not be able to get a loan abroad in one interview. You will need to provide for travel expenses, or even accommodation if you have to stay more than one day.
The case of people registered with the FICP
People registered with the Banque de France in the Central Payment Incident File (FICP) no longer have access to credit. All the borrowers who found themselves one day in this case know how difficult this situation is.
Making a credit abroad then appears as an interesting alternative, the FICP incident file being only available to French and foreign banks established in France.
This lack of transparency also makes foreign banks suspicious and no less demanding than French banks. And without sufficient information, there is every reason to bet that the bank refuses the loan.
Favorable situations to borrow abroad
The case of border workers
Border workers are in a better position because they have a work contract in the country. To put a French bank in competition with a bank in the country is a logical approach.
For Swiss cross-border commuters, it will even be appropriate to benefit from the advantages of a mortgage in Swiss francs to avoid currency risk. Indeed, Switzerland is not part of the European Union and wages are therefore paid in Swiss francs.
Buy a property abroad
Buying abroad facilitates the negotiation of an on-site loan. First of all, the foreign bank will not be surprised by your approach. Then, the establishment of a guarantee will be facilitated with a mortgage on the property.
What is the regulation that applies?
Since 2002, all European banks use the same mathematical formula to calculate the overall effective rate. This directive makes it possible to compare identical offers.
In addition, it is strongly recommended to compare only the TEG which takes into account all the ancillary costs related to your mortgage. We also talk about APR which annualizes the rate.
If you get a loan from a foreign bank, you will have to ask yourself the problem of the regulation of the contract. Will it be subject to the law of the country where the bank is located or to the French regulation which is one of the strictest and most protective of Europe.
Rome Convention on Credit
The Rome Convention protects the borrower and prevents the bank from depriving it of the regulation of his country if it is favorable to him. The bank and the borrower then freely designate the regulations that will apply to the loan agreement. Otherwise, the law of the country will apply.
However, in practice, it is difficult to force the bank not to choose the regulations to be applied.