There are an estimated 5.5 million Brits permanently living abroad, and more than 600,000 of them are living in the USA, according to the 2016 census. In 2019, records showed that more than 700,000 Brits are living in European countries.
Although living abroad has its perks, it also offers difficulties one has to face, such as lack of funds. Sometimes, you cannot afford to pay for an unexpected bill. It’s even more difficult if you are a British citizen living abroad because of school, work, or any other reason. The last resort for you would be to get a personal loan.
How personal loans work
A personal loan is money that you borrow that can be paid back in weekly, bi-monthly, or monthly instalments, depending on the payment terms. It can be payable from two to five years, depending on the terms. This type of loan is perfect if you have emergency expenses, such as sudden repairs or medical bills.
Going to hospitals in a foreign country can be expensive. Sudden expenses cannot be taken care of immediately by many people. Unexpected repairs for cars and homes can also be hefty, especially if the broken thing is a vital part of the car or home. Many people cannot take care of these expenses immediately. Thus, they resort to personal loans.
This loan is usually unsecured, meaning you don’t have to set up collateral to secure the loan. You pay the money back with interest, which will depend on your creditworthiness. Your creditworthiness will be examined using your credit history, income, other debts, and credit score.
There are various lenders that offer personal loans. It can be through a traditional bank where you have an account, credit unions, or an online lending company. Credit unions have a less tedious process than banks. However, the easiest and fastest way to get a personal loan is through online lenders. Taking out personal loans is easier now more than ever, thanks to lenders who made their personal loan applications available online.
First, you have to prepare all pertinent information needed for your application. This includes income information, employment info, and anything related to your creditworthiness. Next, shop around for a lender that suits your qualifications and needs. Third, apply for a personal loan. And lastly, wait for confirmation.
Once your application is confirmed, you can get the money immediately.
Use your credit data to apply and familiarize credit scoring
Some lenders may translate your credit data from the UK to the credit scoring in their country. This means that foreigners, like yourself, can be qualified for a loan in other countries, such as the USA, where credit scores are checked.
Credit scoring is a system used by lenders to measure the creditworthiness of an applicant. This is used to gauge the risk of lending money to you.
A good credit score means you will probably pay on time. A higher credit score means you will have the chance to get a loan with lower interest rates and more favourable payment terms. Having a bad credit score might affect your application.
Take note that your credit score will be based on your payment history, credit utilization, length of credit history, debt-to-income ratio, and amount of new credit. You might find it difficult to build your credit score as a foreigner, but you can always start slow and steady.
You can obtain a credit report from a credit-reporting agency. Obtaining such will not affect your credit score or a soft inquiry. A hard inquiry is what impacts the credit score, which happens when you already applied for a loan and the lender wants to inquire about your creditworthiness.
To build and improve your credit score, make sure that you pay your bills on time. Whenever possible, you should also pay your bills in full. You should also keep your credit card balances low. Lastly, do not apply for new credit if you do not need it. Save your credit for something more urgent, such as emergency expenses.
Check the borrowing laws of the place where you are getting a loan
Being a foreigner, it might be confusing for you since UK laws sometimes are not the same as laws in other countries. What may be allowed in the UK might not be allowed in the place where you are currently living in. Thus, it is important to check and understand the laws on borrowing money in the place where you are planning to get a personal loan.
For example, the Federal government of the USA has a Truth in Lending Act (TILA) that protects the rights of the consumers making financial transactions. It further provides that lenders should disclose finance charges, monthly payment amount, late fees, and other penalties.
Living outside a familiar place is already difficult. However, having to think about emergency expenses makes everything more difficult. Good thing that foreigners like you can get personal loans for such emergency expenses. All you have to do is to improve a good credit score, apply, and wait for the approval.