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Living overseas often means starting a new job and living in a new home, but it can also include purchasing a new car. The following points should be considered before making the decision to purchase a car abroad.
Before buying a car abroad, it is important for individuals to ensure they have a proper license to legally drive in the host country - some will accept international licenses or U.S. state licenses, but others may require a local license acquired from the host country, says Marc Schwartz, founder of Schwartz International, an international tax advisory and consulting firm in Atlanta. For example, in the U.K., Americans are only allowed to legally drive with their U.S. license for up to 12 months.
Before buying a car, individuals should evaluate the strength and accessibility of their destination's public transportation system.
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If public transit isn't possible - or desirable - renting a car may be a good alternative for a shorter stint abroad, but it can add up for an individual living overseas for an extended period of time.
Whether paying for a driver or buying a car, individuals living overseas can minimize the cost of a car by signing up for an online foreign exchange provider's email market-rate alerts that can notify them about preferred exchange rates before purchasing a vehicle. For example, if an American expat living in England wants to purchase a car for £85,000 pounds (GBP), he can sign up for email market-rate alerts. When he is alerted to a preferred exchange rate of 1 U.S. dollar (USD) = 0.656 GBP, he can go to his online FX account and secure the latest rate. If he is able to secure the same rate he was alerted to, he can convert $129,600 USD in order to submit a foreign payment of about £85,000 GBP to a U.K. car dealership.
Expats should consider gasoline prices, security level, infrastructure and terrain in the host country to determine the most appropriate foreign vehicle to purchase. If an expat's home abroad were in an area with narrow roads and tight turns, a smaller car would be more practical than a large SUV, says Stephen Thompson, a financial planner at Keats Connelly, a cross-border wealth management firm based in Phoenix.
A foreign country's laws should also be taken into account. For example, all vehicles in Germany are required to have winter tires or all-season tires during winter conditions, and drivers are subject to fines if they don't comply.
If a U.S. expat purchases a foreign vehicle and wants to ship the car back to the U.S., he or she may face additional costs to the shipping, which will vary based on transportation, import duties and insurance. Furthermore, car parts and services may not be available in the home country for repairs on foreign vehicles. According to Thompson, it's most important that a foreign vehicle being sent to the U.S. is compliant with its environmental and safety regulations.
Regardless of cost, it may be illegal or at least inconvenient to drive some foreign-bought cars in the U.S., especially if their odometers and speedometers measure distance in kilometers when speed limits are posted in miles per hour, Schwartz says.
To purchase or sell cars abroad, individuals should contact expatriate communities through their local U.S. embassy or consulate in their host country who can give advice and even act as a network of buyers and sellers for cars.
Example: 1USD = xx INR
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