By Georges Budagu Makoko

Community-based organizations and immigrant service providers should direct immigrant community members to reliable sources of financial literacy. And immigrants should avoid listening to hearsay from uninformed people who may give bad advice.

Understanding the basics of U.S. finances is essential to thriving in a society where cash plays a role in every aspect of life. Twenty-one years ago, when I moved to Maine from DR Congo, I arrived with a background in business administration and finance. Even so, during my first years here, I experienced significant challenges navigating the financial and banking system of the U.S., which seemed unbelievably complicated and mysterious. 

This past month I spent some time talking with leaders of financial institutions, and they shared information about how new arrivals in Maine are doing financially. Some expressed concerns, explaining that gaps in understanding on the part of some immigrants have led to defaulted loans,  the repossession of vehicles, foreclosure on  homes, and the loss of large quantities of hard-earned money.

Over the past few decades, I have seen some other immigrants thrive, while others did not. Sometimes this was because they did not learn about the U.S. system, and so they made serious mistakes, or perhaps were exploited by predators.

It is true that learning about the system can seem overwhelming at first. Most newcomers arrive with limited English proficiency and come from countries with very different financial backgrounds. In fact, some come from nations where banking systems are almost absent. Nonetheless, when they step onto U.S. soil, people are faced with complicated financial rules, policies, and regulations. 

The U.S. operates on a credit system, which involves credit scores, credit histories, and interest rates. This kind of system is not common in many parts of the world and takes time to understand. The best things to do are learn from reputable sources – such as Amjambo Africa’s financial literacy sections – and employees of reputable banks or credit unions.

Most banks and credit unions want their creditors to succeed and will answer questions and offer help when customers reach out. Many also have interpreters on staff to help. Creating a relationship with a bank or credit union is important, both to learn about the system, and to ask for help if it becomes necessary.

One of the first things many people do after they get their first job in Maine is try to secure a loan to purchase a vehicle. Different financial institutions offer loans at different rates, so shopping around for the best deal is a good idea. Some financial institutions will not even loan money to immigrants without a U.S. credit history. 

Getting a loan, and at what interest rate, is dependent on one’s credit history and one’s credit score. So new arrivals should start right away to build good credit, and there are a number of ways to do so. (See Amjambo Africa’s next four-part financial literacy series “Understanding Credit.”

Taking out the right sized loan is important, because in the U.S., paying back loans on time, and not defaulting on them, is essential to building good credit. However, sometimes borrowers take out loans that are too big. This happens with car loans with some frequency, as some people do not realize that the more expensive the vehicle, the greater their costs will be – expenses such as car insurance, maintenance, registration, monthly payments, and interest all add up quickly. 

If payments are late, the borrower may begin to receive notices and phone calls reminding them about payments. In this case, the worst thing to do is ignore the calls, and the best thing to do is reach out to the financial institution and ask for help. Most banks have options to assist their customers, such as skipping one month’s payment or making partial payments for a while. And there are other supports related to true hardship assistance as well.

Financial institutions are most likely to help customers who maintain good communication, ask questions, and express a need for help if needed. Refusing to communicate will only worsen the situation. Defaulting on a loan is serious, and it is not possible to avoid collections. The best choice of all is to think carefully about what level of loan is manageable before signing on one.

Over time, new arrivals learn best practices and need less support from their financial institution. But until then, I urge immigrants to study the U.S. financial system, and not become the victim of a predator’s efforts to get their money, or of their own mistakes.