FOREIGN CURRENCY LOAN

FOREIGN CURRENCY LOAN

FOREIGN CURRENCY LENDING FOREIGN CURRENCY LOAN MEANING DEFINITION RISKS OPPORTUNITIES OF FOREX LOANS FOREIGN MORTGAGE

WHAT IS A FOREIGN CURRENCY LOAN?

A foreign currency loan is by definition money that is granted in the currency of any foreign country to a borrower against the repayment of the loan principal amount through free convertible currencies plus interest.

A foreign currency loan or forex loan is a funding facility that is disbursed and repaid in a different currency than the currency of the revenues of the loan applicant with substantial positive or negative consequences for a borrower who earns money in a currency and repay a loan in another currency.

A foreign funding facility in contrast to local loans is facing two main challenges for the loan applicant and that can have a huge impact on his or her financial position: the permanently changing exchange rate and the interest rates of the foreign currency.

WHAT ARE THE OPPORTUNITIES AND THE RISKS RELATED TO A FOREIGN CURRENCY LOAN?

Foreign currency loans present two sides that can be profitable for a borrower or disastrous given that he or she needs to repay a loan in a currency on the basis of earning money in another money.

The developments of the exchange rate and the interest rates on both sides, the lenders and the borrowers will determine the outcome of such a loan agreement.

OPPORTUNITIES OF FOREIGN CURRENCIES LOANS

Foreign currency loans once they have been agreed are made and in case the exchange rate of the lender’s currency against the borrower’s currency goes down with the time, the loan applicant will have to repay less principal.

Same applies for the interest rates, as they different from currency to currency, in case the interest rate of lender’s currency decrease against the borrower country interest rates, the latter will have to pay less interests.

RISKS OF FOREIGN CURRENCY LOAN

The risks of foreign currency loans are huge if the exchange rates of the borrowed money currency and the interest rates take the wrong direction (foreign currency becomes stronger and interest rates go high), and given that the borrower revenues are in a different currency, he may risk to repay more than initially agreed.

The case of Hungary in 2008 is typical for the speculations of households who borrowed for mortgages in Swiss Francs what appeared at the beginning very attractive and was at the end pushing borrowing households to the financial edge.

OVERSEAS STUDENT LOAN    LOAN BROKER    OVERSEAS PRIVATE LOAN   WITH GUARANTEE    EDUCATION LOAN    OVERSEAS MORTGAGE    BUSINESS LOAN   PERSONAL LOAN    TAX ON LOANS    WITHOUT COLLATERAL    MICROFINANCE    P2P LOAN    CAR LOAN    WITHOUT CREDIT CHECK    CREDIT CARD    DEBT CONSOLIDATION    WITHOUT JOB    WITH BAD CREDIT    WITHOUT UPFRONT FEE    FOR DISABLED    ISLAMIC LOAN    LIST OF BROKER    LEASING FROM ABROAD    LOAN FROM OVERSEAS BANK   CHINA    THAILAND   EUROPE   FOREIGN STUDENT    FOR MIGRANT    FOR WOMEN   CAR FOR FOREIGNER   ELECTRIC BIKE LOAN    STUDENT LOAN REPAYMENT FROM ABROAD   LOAN FROM INDIAN OVERSEAS BANK   FOR MASTER    LOW INCOME LOAN   FOR FOREIGN STUDIES   OVERSEAS CROWDFUNDING   FOR FARMER    OVERSEAS PAYDAY LOAN   WITH NEGATIVE RATE  OVERSEAS BANK ACCOUNT   OFFSHORE BANK ACCOUNT  ANONYMOUS BANK ACCOUNT  OFFSHORE BANK ACCOUNT  ANONYMOUS BANK ACCOUNT   GERMANY LOAN   SWISS BANK ACCOUNT    LUXEMBOURG ACCOUNT   PANAMA ACCOUNT  DUBAI BANK ACCOUNT    LOAN FOR US CITIZEN  LOAN FOR BRITISH   SWITZERLAND LOAN   MORTGAGE FOR ALIEN    LOAN FOR HOUSEWIFE  FOR FOREIGNER    UK LOAN    KREDIT OHNE SCHUFA    USA LOAN    AUSTRALIA LOAN   FRANCE LOAN    BELGIUM LOAN    NO PROOF OF INCOME    WITHOUT INTEREST   START-UP LOAN   MAURITIUS    MOROCCO   NEW ZEALAND   LUXEMBOURG LOAN   MONACO LOAN   SAUDI ARABIA  QATAR    LOAN FROM GOVERNMENT    ANDORRA LOAN    FOREIGN BANK    FOREIGN INSURANCE   FOREIGN CAR INSURANCE   FOREIGN HEALTH CARE   FOR EXPATRIATE    FOR CROSS-BORDER   FOR NRI   BLACKLISTED LOAN    MOTORBIKE LEASING    LICHTENSTEIN   CANADA LOAN  WITHOUT SCHUFA   ISRAEL LOAN   ITALY MORTGAGE   DUBAI LOAN   LOAN FOR REFUGEE   LEASING FOR FOREIGNER  SPAIN  PORTUGAL   LEASING GERMANY   CORONAVIRUS LOAN