The Debt Panel: 'Can I pay off my $16,330 loan from another country?'

The Dubai resident is planning to study overseas but is concerned that her bank may want her to pay off the loan in full before leaving the UAE

Mathew Kurian / The National
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I have applied for a student visa to study for my MBA degree overseas and plan to leave the UAE in December.

However, I have a Dh60,000 ($16,337) personal loan that I took out in March this year. It is a four-year loan and I pay Dh2,294 towards it each month.

I am employed and have not missed any payments, and have a good credit score. When I move to overseas, I will be working part-time and will be able to continue paying off the loan.

Is it possible that I can continue paying off the loan from another country? I am unsure about how to approach the bank to discuss this or if it is legally allowed.

If it is possible, what will the bank require in terms of documents or proof that I will be able to continue to pay my monthly loan repayments?

I have no plan to “run away” from the loan but don’t want to give up my dream of studying for my MBA either. Can you advise me on what I should do? KB, Dubai

Debt panellist 1: Steve Cronin, founder of DeadSimpleSaving.com

You definitely won’t have to give up your dream of studying for an MBA (whether they are worth the money is a topic for another day).

I do wonder, though, if you knew you might study overseas when you took out the loan in March. That would have been the best time to ask different banks about paying off a loan from another country and to find one that was supportive.

Each bank has a different approach to this issue and sometimes the same bank will adopt a different approach for different customers. You have to ask them. And let me emphasise that: you have to ask them.

Unless you are maintaining residency in the UAE while you are away by having your own limited company and visiting the country at least twice a year, the bank will find out you are leaving.

First, they are very likely to be notified of a final salary payment by your employer. Then your residency visa will be cancelled.

Call or, even better, visit the bank to discuss paying off the loan while overseas. Come prepared with evidence of any savings or investments you have that could contribute to the loan, such as bank or brokerage statements.

Also show evidence of the level of income your part-time work will generate, for example articles showing X per cent of MBA students at your school work part-time and are typically able to earn a certain amount of money every month.

Suffice to say, it would be better if you already have a job in the country that you are moving to, but I imagine this might be unlikely.

If the bank refuses to allow you to leave the country without paying it off, you could try talking to other banks or even borrow money from a relative and pay them interest.

It is important to start on this now, as December will come around quickly.

Debt panellist 2: Carol Glynn, founder of Conscious Finance Coaching

Congratulations on taking the next step in your studies.

It is very possible to pay your UAE loan off from overseas.

It is not a legal requirement to stay in the UAE while you pay off your debt. However, banks tend to get nervous when borrowers leave the UAE with unpaid debt.

Each bank will have a different approach to this kind of situation, so it is difficult to predict how they may react to your plans to leave the country.

It is wise to visit your bank branch and speak to your relationship manager and the loan department to explain your plans to repay the loan. It is important to do this before your final salary is paid.

Quote
If the bank refuses to allow you to leave the country without paying it off, you could try talking to other banks or even borrow money from a relative and pay them interest
Steve Cronin, founder of DeadSimpleSaving.com

It would also be very helpful if you can show your bank evidence of how you plan to repay the loan while studying.

For instance, do you have proof to show you will be working and can afford to make your loan repayments? If yes, make sure to take this with you to the bank.

When your employer cancels your visa and pays your end-of-service gratuity, the bank will be notified and will likely freeze your account/s until you provide a new employment visa and Emirates ID.

This will mean you cannot access your final payment or any other cash you have in your accounts.

The bank is within their full rights to call in the full amount, so it would be wise to prepare for this potential scenario.

Alternatively, if the bank does agree to to your request, the loan's interest rate and some other terms might change.

However, your good credit history and honesty will stand in your favour.

It would be best to repay the loan in full before you leave the UAE as this will remove any risk of the bank imposing penalties. Is this a possibility?

Perhaps you could take a loan out in your home country or borrow from family, so you can clear your debt before your leave. This would prevent a potentially complicated exit from the UAE.

Felicity Glover, Personal Finance editor at 'The National'

The good news is that there is no legal requirement for a person to be in the UAE to pay off a personal loan.

However, you will need to discuss your situation and plans with your bank before you leave the UAE in December.

Each bank has different policies and approaches to this type of situation, but they do accept loan repayments from overseas based on an official agreement between the two parties.

It is important to finalise this before you leave the country as you may face a travel ban or other legal consequences.

You should also be aware that when your final salary is transferred to your account, the bank will freeze it as you have a personal loan — and it is likely that it will be used towards the debt.

Your first step should be to arrange a face-to-face meeting with a bank representative so you can explain your situation.

Bring evidence of your ability to continue paying the loan. Follow up the meeting in writing by sending an email to the bank to confirm what was discussed and any agreement you may have come to with the bank representative.

You appear to have a good credit history and this will stand you in good stead with the bank. However, the terms of the loan may be updated if the bank agrees to your request.

I wish you all the best with your studies and new chapter.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to pf@thenational.ae

Updated: August 31, 2022, 5:00 AM
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