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Taking out UK Loan Before Moving to US

Taking out UK Loan Before Moving to US

Old Oct 3rd 2014, 8:05 pm
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Default Taking out UK Loan Before Moving to US

Hi,

Ive been looking into various ways of buying cars once we arrive in the US, and have spoken to International Autosource and also looked at buying an old banger when I arrive.

I was also considering taking out a loan in the UK before I leave and using the money to buy a car for cash on arrival. This would save any problems with getting finance and would prevent us from needing a rental car once we arrive while I wait for my SSN to be able to apply for credit. It also looks like the interest rates would be better in the UK, although this may be offset by any fees for sending money from the US to the UK to pay it back.

Has anyone got any experience of doing this? I assume that there would be no problem with doing this provided you had a method of sending money back to the UK each month to make the payments?

Please let me know if ive missed anything that could cause a problem!

Thanks
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Old Oct 3rd 2014, 9:30 pm
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Default Re: Taking out UK Loan Before Moving to US

I would imagine it will depend on what type of loan you take. I doubt the bank would be happy to lend money with the collateral sitting 5000+ miles away.
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Old Oct 3rd 2014, 9:33 pm
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Default Re: Taking out UK Loan Before Moving to US

I was just thinking about a personal loan. The bank wouldn't know that I was moving away, and as long as they got their payment every month would they ever know or care?
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Old Oct 3rd 2014, 10:33 pm
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Default Re: Taking out UK Loan Before Moving to US

What address are you going to give the bank? If they write and it gets returned 'not at this address' all hell breaks loose. (as related to be me by financial advisor who had one client that had this happen with his mortgage company)
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Old Oct 3rd 2014, 10:36 pm
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Default Re: Taking out UK Loan Before Moving to US

Originally Posted by davejenk477 View Post
I was just thinking about a personal loan. The bank wouldn't know that I was moving away, and as long as they got their payment every month would they ever know or care?
Due to recent legislation, many foreign banks are very uncomfortable dealing with any person having US tax obligations. Check the fine print.
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Old Oct 3rd 2014, 10:40 pm
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Default Re: Taking out UK Loan Before Moving to US

At the moment I don't have any US tax obligations as I am still living and working in the UK. I would use my current address on the application, which is in the UK, then after I move ill ask them to send any correspondence to my parents address.
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Old Oct 3rd 2014, 10:50 pm
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Default Re: Taking out UK Loan Before Moving to US

Originally Posted by davejenk477 View Post
At the moment I don't have any US tax obligations as I am still living and working in the UK. I would use my current address on the application, which is in the UK, then after I move ill ask them to send any correspondence to my parents address.
Isn't your wife a USC? Why can't she use her credit history?
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Old Oct 3rd 2014, 10:52 pm
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Default Re: Taking out UK Loan Before Moving to US

yes she is but she wont have a job in the US when we arrive
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Old Oct 3rd 2014, 10:54 pm
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Default Re: Taking out UK Loan Before Moving to US

Originally Posted by davejenk477 View Post
At the moment I don't have any US tax obligations as I am still living and working in the UK. I would use my current address on the application, which is in the UK, then after I move ill ask them to send any correspondence to my parents address.
What you are describing is deceptive though. If you went into the bank and said "I'd like a personal loan, I'm moving to America in X weeks to live permanently, I'd use the money to buy a car there." What do you think their answer would be?
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Old Oct 4th 2014, 10:06 am
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Default Re: Taking out UK Loan Before Moving to US

Maybe a little deceptive, but looking at the application I wouldn't be lying at all. I guess its only the same as moving to the US with credit card debt and paying it back from there
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Old Oct 4th 2014, 1:11 pm
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Default Re: Taking out UK Loan Before Moving to US

I find it hard to believe that UK personal loan would be cheaper than a US car loan (which has the loan secured on the car), though it might be cheaper than a US personal loan.

If you take out a UK loan you will become significantly exposed to exchange rate fluctuations, so your repayments might become significantly more expensive if the US dollar falls relative to the British pound, and while movements probably won't move outside the range $1.40-$1.80/£ over the next five years, you could still easily see movements that more than offset any perceived benefit in interest rates.
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Old Oct 4th 2014, 4:29 pm
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Default Re: Taking out UK Loan Before Moving to US

Originally Posted by davejenk477 View Post
Please let me know if ive missed anything that could cause a problem!
A lot of good comments already posted. Another consideration is a UK loan would not help you build a US credit history.

There are plenty of Credit Unions, banks, and even dealer provided credit options to consider. I think the idea of taking out a UK loan prior to moving here is unnecessary, and I'd go so far as to say ill-conceived.
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Old Oct 4th 2014, 9:44 pm
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Default Re: Taking out UK Loan Before Moving to US

I think you could do it, but I don't think it would be a good option. I had a personal loan when I came over and without a related UK bank account to pay it from it was a PITA to make monthly payments by check/mail and be on time. Same with UK credit card debt, it can be done, but in retrospect not worth the hassle.

As for a car, I was lucky, my in laws 'gave' me their second car, a 10 year old Maxima, valued about $2k as a wedding gift. I am still driving it now it is 20 years old. Perhaps a 'beater' from a friend or relative will be a better buy than it sounds...
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Old Oct 5th 2014, 11:38 am
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Default Re: Taking out UK Loan Before Moving to US

Thanks for all your comments, I'll give it some thought. I appreciate that sending payments back to the UK could be a pain, but I'm going to have to do so anyway to make my student loan payments.
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Old Oct 5th 2014, 2:56 pm
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Default Re: Taking out UK Loan Before Moving to US

Originally Posted by davejenk477 View Post
Thanks for all your comments, I'll give it some thought. I appreciate that sending payments back to the UK could be a pain, but I'm going to have to do so anyway to make my student loan payments.
If you think it likely you're not coming back, then there's no point paying off the student loan. Mrs Me is in the same boat with small amount outstanding. We've yet to decide whether to pay it off, and currently it's costing us about £2/month for that indecision.

You should certainly roll up the payments into yearly transactions, if you do decide, otherwise the bank charges are likely to be more than the interest you're saving.
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