As the internet and connectivity make the world a smaller and smaller place, the matter of international loans becomes more commonplace. A few years ago only the wealthiest 1% could lend or borrow money on the global market. But it is a bold new world, and now many of us have these options.
Due to the different interest rates and economies in different countries, international loans can often seem very appealing. It is possible to find banks in Europe that issue personal loans for only 3% interest, and are willing to loan internationally.
Just because you can take advantage of international loans does not mean you should.
Potential Problems with International Loans
The biggest thing to remember is that when you borrow from foreign markets, you are subject to their laws and regulations. The laws that protect you in the U.S. hold no bearing over other countries and how they deal with financial matters.
This could potentially lead to problems such as:
No protection from collection methods, no matter how harassing or aggressive
Changing or “floating” rates influenced by the local economy and value of their currency
Even contractually agreed upon fixed rates might change with no notice.
Depending on where the loan is underwritten, you don’t really know where the money is coming from
International Loans and Oversight
Whenever taking out any kind of loan, reading the contract, the fine print, and the terms and conditions is extremely important. This is never more true than with dealing with loans from a foreign market. The rules may vary greatly from country to country.
You have to be 100% sure of what you are agreeing to before borrowing a dollar.
Although they do not represent the majority of lenders, there are predatory international lenders that live the legal gray area between jurisdictions. Payday loans can cross borders just like people. Do not get connected with a disreputable company just because they offer lower rates!