Before I came to Qatar, I would read horror stories of expats taking out large loans in Qatar, then losing their jobs and being unable to pay the loans back. They were then prohibited to leave the country until the money was repaid. And like many people not in their situation, I judged! So I want to take the time to educate people who-like I was-have no idea WHY- someone would take out what seems like a large amount of money in a foreign country.
The way it is… (My experience)
During orientation at my new job, a bank account was already set up for me. A representative from the bank met with all of us newbies and gave all the information on banking and borrowing in Qatar. When she left, we had her business card (she is our personal banker) and our own debit card with the preselected pin. A few days later, we were also given a credit card with a limit of two months salary.
The process of obtaining a loan here is very simple. A credit check in your home county is not required, you sign a paper and the application is done for you. The amount you are approved for is based on your salary and your job’s approval. You determine how much of that approved amount, you actually want. The interest rate is extremely low (3%) vs the average 24.99 in the U.S. You have the option of having a certain percent withdrawn from your pay each month or the full balance for payment. The amount you take out usually equals a whole lot less than your home country dollar amount. (100,000.00 QAR= approx $30,000.00 USD)
Bottom line: It is super convenient and easy. You can pay off many bills in your home country with the loan from the foreign county in less time and for less money in the long run.
So what about the insecurity of your employment. Let’s be honest, nothing is a sure thing, not even in your home country. You just pray that all goes well. The biggest difference here is, you can’t run away from your debt and just let it go to your credit. I’ll admit, that’s a little scary and I swore before I got here, that I would not take out a loan.
That was until I got here. Yes, I also took out a loan. I used half of it to pay debt back home (to save money-on interest and transfer fees, to focus on only paying bills in one country vs two), and will use the other half to purchase a car. What I did to protect myself: I paid off most of my credit card debt, my car back home, and a personal line of credit. I did not close my credit cards or personal line of credit. So if I needed some money right away (God forbid, I lost my job and had to pay back my loan to leave), I could use my investments and sell my car back home, and my car here. I could use my credit cards and my personal line of credit. If all goes well, I will complete my contract, sell my car here, and go home having paid back Peter and Paul and have some savings. Along with that, I would have gained the experiences of different cultures and bragging rights to have LIVED!
The featured image above was taken inside of the QNCC (Qatar National Convention Center). I thought the escalator was not working but when I stepped on to walk up, it started moving. The point is, we are often so quick to judge before we experience things.