Episode Summary
In this episode of The Expat Files, Johnny Mueller dives into the world of teaching English in Latin America. He discusses the various job opportunities, including helicopter schools, call centers, and private academies, and highlights the cultural and economic dynamics that shape the expat experience. From salary expectations to the unique social status of gringo teachers, Johnny provides a comprehensive overview of the challenges and rewards of teaching English in the region.
Johnny outlines four main ways to find English teaching jobs in Latin America, including looking for ads in local newspapers and online. He describes 'helicopter schools' that target wealthy parents and focus on English instruction, often without requiring Spanish language skills. Johnny also discusses the salary, contracts, and work permits, noting that salaries can range from $400 to $500 per month and that schools may offer incentives to help teachers avoid taxes. He highlights the cultural trend of incorporating English words and phrases into everyday life, even among middle and lower-middle-class individuals, and contrasts the situation on and off the gringo tourist trail.
Johnny emphasizes that having a college diploma, even in seemingly useless fields like art or psychology, makes one a 'college educated gringo' and highly in demand. He highlights that while the tourist trail is competitive, opportunities exist off the tourist trail, especially in private schools. He also mentions that working at a helicopter school can provide work permits, visas, and even residency. Johnny notes that while some private schools are upscale and have unique features like helicopter drop-offs, there are also lower-scale private schools that still seek English teachers. He provides examples of English teachers earning substantial salaries, with some making over 1,200 USD a month, which is considered 'big money' in the region. He concludes by mentioning that some teachers take on tutoring jobs during the summer, often in affluent homes with bodyguards.
Johnny discusses the unique dynamics of gringo English teachers in Latin America, highlighting how they often enjoy a privileged position compared to their counterparts in the U.S. He explains that these teachers are frequently hired to tutor wealthy children, and their services are highly valued, with parents willing to pay substantial fees. Johnny also notes that many gringo teachers eventually transition into entrepreneurship, using their position as a stepping stone for their own businesses. He emphasizes the 'gringo advantage,' where teachers are treated as equals to the wealthy families they work with, often receiving invitations to exclusive events and even being provided with resources like fences and construction services. Johnny also shares anecdotes about the close relationships formed between teachers and students, with some students preferring to spend time with their gringo teachers over their wealthy peers.
Johnny highlights the respect gringo teachers receive compared to their counterparts in the first world, using the example of a gringo teacher who was offered Rhodesian Ridgebacks as a gift. He contrasts this with the lack of appreciation for teachers in places like Minneapolis and Cleveland, where an apple for the teacher might be seen as a poisoned gift. Johnny outlines the process of becoming an English tutor in upscale neighborhoods, emphasizing the importance of marketing oneself as a 'first world gringo' and the potential earnings from tutoring. He mentions the cultural preference for speaking English without a Spanish accent and the perception of accent as a marker of class. Johnny shares that some gringo teachers can make a comfortable living with minimal effort.
In this segment, Johnny discusses various ways to teach English in Latin America, highlighting the opportunities in call centers and English teaching academies. He emphasizes that call centers often seek first-world English speakers to train their staff, offering a salary range of $800 to $1200 a month. In contrast, English teaching academies like Berlitz and Harmony provide lower pay ($5 to $10 an hour) with limited hours (usually no more than 20 hours a week). Johnny also mentions that many gringos working at these academies face issues with management, such as being underpaid or not getting the hours they are promised. Transitioning to a different topic, he then discusses how some Latin Americans finance their illegal immigration to the U.S. by taking out loans, often from coyotes, and the resulting debt they face. He references an article about Annabel Salazar, a Guatemalan man who took out a $2,600 loan to pay a coyote for a trip to the U.S., only to be intercepted and returned to Guatemala. He highlights the financial burden of this debt, which he struggles to repay, and the lack of legal recourse for victims of such scams. Johnny also touches on the challenges governments face in addressing these issues, including the difficulty of prosecuting coyote-related fraud due to legal loopholes and the reluctance of victims to file complaints.
Johnny discusses the issue of high-interest debt among migrants in Latin America, particularly focusing on the exploitation by coyotes, loan sharks, and informal lenders. He highlights how these debts are often disguised through fraudulent loan contracts, with interest rates as high as 120% annually. The discussion includes statistics showing that 75 to 80% of migrants surveyed have paid coyotes, and nearly a quarter paid more than $6,000. Johnny also notes that many migrants turn to informal lenders due to lack of access to traditional banking systems, and that these loans often come with severe legal and financial risks. He mentions the lack of legal oversight and the difficulty of pursuing legal action against such lenders. The segment ends with a call to visit the website of The Expat Files.
This segment is the closing portion of the podcast, where Johnny Mueller encourages listeners to visit the official website, YouTube channel, and contact him for further assistance. He also promotes his blog and offers one-on-one consultations for those interested in Latin America.
Topics
Teaching English in Latin America, Helicopter schools, Salary and contracts for English teachers, Tax incentives for teachers, Cultural trends in Latin America, Job market for English teachers in Latin America, Work permits and residency for expats, Private school opportunities, Salary expectations for English teachers, Gringo English teachers in Latin America, Entrepreneurship opportunities for expats, Cultural dynamics and social status
Chapters
00:00:00 Opening 00:00:47 Teaching English in Latin America: Four Ways to Find a Job 00:02:09 The Impact of English Education on Children in Helicopter Schools 00:04:09 Salary and Contract Details for English Teachers in Helicopter Schools 00:05:02 Supply and Demand for English Teachers in Latin America 00:06:40 Living Comfortably as an English Teacher in Latin America 00:08:54 High Earnings for English Teachers in Latin America 00:09:45 Gringo English Teachers and Their High Fees 00:10:23 Transition from Teaching to Entrepreneurship 00:11:24 The Gringo Advantage and Social Status 00:13:13 The Breeding of Rhodesian Ridgebacks as a Symbol of Respect for Gringo Teachers 00:14:01 The Value of Rhodesian Ridgebacks and the Respect for Gringo Teachers 00:14:56 Marketing as a First World Gringo for English Tutoring 00:17:11 The Comfortable Living of a Gringo Teacher in Latin America 00:17:34 The Need for First-World English Speakers in Call Centers 00:19:05 Illegal Immigrants and the Debt They Face 00:22:46 High Rates of Coyote Payments Among Migrants in Latin America 00:23:18 The Role of Loan Sharks and Informal Lenders in Migrant Debt 00:25:06 High Interest Rates and Legal Risks of Migrant Loans 00:27:11 Website Promotion and Call to Action 00:27:14 Promotion of Expert Blogger John Galt 00:27:16 Special Content on the Website 00:27:19 YouTube Channel Promotion 00:27:22 Encouragement to Subscribe 00:27:25 Subscription Reminder 00:27:27 Mention of V-W-Y-F (possibly a mnemonic or acronym) 00:27:35 Closing Statement and Podcast Title
Transcript
Automatically transcribed from the original recording; names and wording may contain errors.
[00:00] South of the border, down Mexico way That's where I fell in love when the stars above came out to play And now that I wonder Hello there all you expat wannabes I'm Johnny Mueller and you're listening to The Expat Files, living in Latin America The show that tells you just what it's like to live, work, play and or retire down here in Latin America It's a mix of the good, the bad, the ugly and the great And it's all right here so let's get started Here's a question I get on occasion This is from Chris, he says, Hi Johnny, those teaching English jobs in Latin America, how much do they pay? Are they year round? Do you get summers off? What about contracts and work permits?
[00:46] Thanks Chris in Connecticut Now Chris you see there are actually four ways to teach English in Latin America One of course is to answer one of those ads in one of the local Latin newspapers The paper will be in Spanish of course but the ads will be in English By the way most of those English teacher job openings will be at what I call helicopter schools That pride themselves and actually do their marketing to their target That would be wealthy parents with kids By advertising to those parents that they have a high percentage of first world genuine gringo English speakers teaching English at their school Which is why you don't have to know Spanish at all to teach at a school like that And by the way you probably won't be teaching just English Since it'll be K through 12 you'll be teaching history and sociology and geography etc etc all in English
[01:34] In fact I know one gringo English teacher who's been teaching 11 or 12 years now and his Spanish still sucks Why? Because his job from the start was to teach his classes all in English And speak to the kids around school in the hallways and such in English too So parents are under the impression that having a number of first world gringos teaching there Will turn their kids into little gringoized clones by proxy with no Spanish accents And a lot of them do just that In fact I know quite a few upscale Latin families that send their kids to the helicopter schools And the kids do speak nearly perfect English without any accent And as it turns out they almost always speak much much better English than their own parents Now there are two main ways to get an English teaching job like that You can look on the internet up in the states
[02:21] Believe it or not on the net they actually have English teacher headhunter agencies Or better yet come down to the Latin American city of your choice and check out the local newspapers In the classified help wanted sections Yep they still have printed newspapers and yellow pages here Another thing they copied from the first world Just look for the ads that say English teachers wanted And they will really stand out because maybe only one in fifty ads is in English Off the gringo tourist trail anyway Now lately I've noticed a lot of ads of all different types will stick in English word or phrase in here and there It's a fad and it's all the rage Remember we're in the land of gringo wannabes In fact now we're starting to see road signs and posters and buildings, billboards, street names Even names of businesses way off the gringo tourist trail that have shoved in a gringo word or two or even a phrase
[03:12] Not that ninety nine percent of their local population gets what those English words mean But to them it's cool In fact the other day I was invited to a middle class guess what Quinceaños party that's a girls sweet fifteen party Wow that was a trip I'll have to tell you about that next show But I'll mention one thing about that party now Almost every single young guy in that place Remember they're all fifteen sixteen year olds now And probably at least sixty percent of the young girls in that place Had clothing items, hats, t-shirts, sweaters, jeans, whatever That had English words or phrases on them And of course the kids knew nothing of what they said or really meant Because these were middle and lower middle class kids No bilingual helicopter school kids at this bash But as I've said in past shows It's all the fashion down here to have English words and phrases on anything and everything
[04:02] But I digress as usual Though not too far cause we're talking about English and English teachers And whether they get paid in those helicopter schools They start at about four to five hundred dollars a month And generally you're on a year to year contract Now when you're off the gringo tourist trail A lot of times schools will make deals with teachers Paying them let's say half of that salary in cash or a check That might say port de d'or on it which means pay to the bearer Or it might say for services rendered And the other half of that salary might be to you as a payroll check And they do that as an incentive because they know You'll only pay taxes on the payroll check So they are doing you a favor by helping you evade taxes How do you like them apples? By the way that happens almost always off the gringo tourist trail On the gringo tourist trail it's a little bit different
[04:48] Why? Because on the gringo tourist trail For example in Costa Rica or Playa del Carmen San Juan del Sur whatever There are just so many English speaking gringos around Schools have their choice of a huge English speaking labor pool So they don't have to make side deal incentives Because it's a supply and demand issue And there's a huge supply of English speakers So bottom line if you got any kind of college diploma at all Could be in English or geology, astronomy, biology Even totally useless degrees like art or psychology or drama Journalism, political science, business, African American studies or phys ed No matter you're still a college educated gringo And you're in demand in Latin America You can easily get a job at a helicopter school
[05:36] Though the real big demand is off the gringo tourist trail On the trail forget about it You got too much competition And by the way as much as Latins adore diplomas and certificates of any kind Don't bother to peck that Harry's A1 truck driving school diploma It probably won't help but on second thought I could be wrong about that By the way if you're really on a low budget backpacker style or whatever There is an advantage to working at a helicopter school Because they'll get your work permit and visa for you And if you're there long enough they'll even get you your residency That'll be part of your contract package Again we're talking off the gringo tourist trail By the way what I'm explaining here is true Whether it's in a giant Latin American city of 10, 20 even 30 million Like Sao Paulo, Brazil or Buenos Aires, Argentina
[06:22] Down to small Latin towns off the gringo tourist trail of 10 or 20,000 people They still have high end K through 12 private schools in need of first world gringo teachers So you can be a teacher and live the city life The medium sized city life Or the very small town life too And still support yourself in a very decent way on an English teacher's salary And as far as the timeline and the teaching schedule As it turns out about a quarter of the private K through 12 schools Are on the same schedule as schools up in the first world With June, July and August off Again they're trying to be as gringoized as possible So little by little private schools are changing to that same format Though most Latin private schools are still on the usual Latin schedule Which is reverse of the first world
[07:09] Their summer during our winter up north In other words they get a huge three month long Christmas vacation They call that their summer vacation because it's summer down here then And that starts in the middle of October And they go back to school for the new year around the middle of January So their new school year doesn't start in September It starts in January Now note that all Latin public schools And that's where about 95% of all Latin kids go They of course go by the traditional Latin school year And by the way I call these upscale private school helicopter schools Because a lot of the parents have helicopters And some of the kids are actually dropped off at school in the morning by helicopter So I guess one of the differences is up north you've got no helicopters But you've got metal detectors at the schools
[07:55] And down here no metal detectors but plenty of heliports Does that make sense to you? I guess nothing makes sense anymore, huh? But of course not all private schools are that upscale There are lower scale private schools that have no helicopter kids at all And they have no real first world gringo teachers either Why? Because they can't afford to pay them twice What they pay the regular native teachers We gringos come at a higher price, you know But no matter, even a town of 10 or 20 thousand Will have a very high end private school or two Even rather small towns have wealthy people who want to send their kids To a high end bilingual school And those are the schools that will want to hire you The first world perfect English speaking gringo So they might start you out at four, even 600 a month And every year your contracts renewed
[08:42] They'll bump you up quite a bit In fact, I know a couple of gringo English teachers Who've been teaching at their schools 10 years or more And one of them makes around 1200 a month And the other makes around 1500 a month Which really is big money down here In fact, the one guy bought himself a nice piece of land Built himself a nice house And he goes on Latin American vacations all the time And he's got an adequate car too Nothing spectacular but not a junk either Whereas if he made that kind of money up in the states He'd be in the poverty class and on food stamps for sure Oh, and by the way, some of the first world English teachers Will take that summer and do some tutoring As one English teacher friend of mine told me There are always some unattentive dunces with low grades In those helicopter schools And their parents are glad to pay for a real bona fide 100% gringo teacher
[09:29] To come to their house for a few hours a week And often it's a mansion with bodyguards, etc And they'll invite the gringo English tutor over To teach or pretty much babysit Their spoiled and titled underachieving dunce Now my gringo English teacher friend Charges around 20 to 25 bucks an hour for that service And these rich kids' parents are willing to pay Just about anything he says So their kid doesn't fall behind and have to repeat the year If that were to happen, it's a big social faux pas in Latin America Especially with the upper classes Where bad news and rumors travel at the speed of light In fact, one of my gringo helicopter school teaching buddies Tells me some teachers make just as much money tutoring As they do on their real teaching jobs And it's true, a lot of gringos and expats
[10:15] Who come down here first as teachers in private schools They end up, after six months or so, Finding their own niche and starting their own businesses I'd say that happens to about half the people That come down here who first started by teaching English In other words, a lot of those gringo teaching jobs Turn out to be perfect stepping stones Even a launch pad to a real entrepreneurial career Especially for those gringos who come down Knowing they absolutely have to work eventually But don't know what kind of business they want to start Now one of my gringo teacher buddies Estimates that about 50% of the gringo teachers he knows End up starting their own businesses after a while And getting out of teaching altogether Usually after a year or so Now he taught at three different helicopter schools Over the last 14 or 15 years So he's known maybe a hundred or more gringo and gringo teachers in that time
[11:01] So he's got a good sample And the other 50% of gringo teachers that stay on like him Find Being a first world gringo teacher at a helicopter school is an easy life Because you see They too have that gringo advantage going for them And believe it or not Unlike if you teach at a very wealthy school up in the states Down here You are not considered a lesser person Or the hired help In fact, just the opposite You've got that gringo advantage And oftentimes wealthy parents and kids will take you under their wing And you'll get invited to all kinds of special events And you'll even get to fly in those helicopters once in a while In fact, one gringo teacher friend of mine Mentioned to his class that he needed to put up a fence And guess what Two weeks later A truck showed up And a fence appeared Turns out One of the kid's dads owns a chain of hardware stores And a construction company Now that's what I call the gringo advantage
[11:47] You see, down here Unlike the teaching profession up in the states So often because you're a gringo And you're teaching their precious little kids You're an equal to the parents Who might be fantastically wealthy Cement, sugar, or perhaps coffee, Teak, and pineapple Plantation owners, etc. Or they might just be people who squandered a hundred years of their family's wealth And are up to their ears and dead And just putting on a show Sometimes you just don't know But whether it's real or a big show These are people with summer houses, beach houses, boats, And even sometimes houses in my jammy In fact, I remember two separate times When I was visiting one of my English teacher buddies On a Saturday at his house We were sitting on the porch And a black bulletproof SUV pulled up The bodyguards got out And a couple of kids came over just to visit Turns out they'd rather hang on weekends With their favorite gringo teacher
[12:34] Because, you know, there's a huge shortage of gringos Off the gringo tourist trail And surely gringo teachers are probably the only gringos These kids ever really get to meet That said, believe it or not There are times they'd rather hang out on the porch With their gringo teacher At his little thousand square foot house Than hang out at the elaborate beach house With the pool and the jet skis and the ATVs I guess that gets boring after a while, right? I hear stories like that from my English teacher buddies all the time Oh, and here's another incident like that One of my English teacher buddies mentioned in class That he was looking to get a dog And within a couple of days There were kids already offering him puppies And he ended up taking, as a gift from one of the kids A breeding pair of Rhodesian Ridgebacks A breed I'd never heard of, neither did he Of course, they had papers
[13:19] And their parents were show winners So these puppies were worth at least a grand apiece Turns out the kid's mom bred them for a hobby Which meant nothing to my buddy He would have taken a mutt He was just a laid back gringo who came down as a backpacker Many years ago When you hear stories like that you realize Gringo teachers down here really do get the kind of respect That teachers up in the first world just never get any more So up in Minneapolis and Cleveland It might be an apple for the teacher Though I doubt the teacher would take a bite Because it might be poisoned Meanwhile, here in Latin America An apple to impress the teacher? Come on, that would be an insult Instead, it could be any number of cool things A custom installed fence A weekend at the beach house Or a pair of Rhodesian Ridgebacks worth a couple of grand
[14:04] Which is why I understand about half the gringo teachers Never do get those outside jobs And look for any other career Because, well, they too find they've got that gringo advantage And are treated like B grade rock stars And as my friend always says, it's hard not to get used to that But then he says you have to put up with the downside And look the other way at the racist, classist parents And that, of course, rubs off on their children too Now, the second way to get an English teaching job in Latin America Is just to tutor Again, when you're on the gringo tourist trail That's not going to be very easy to pull off Way too much gringo competition But when you're off the gringo tourist trail All you have to do is market yourself in the right upscale neighborhoods Starting with putting a slick ad up on those supermarket bulletin boards I'm always talking about Write the ad in English and Spanish
[14:51] And if you don't know any Spanish, have someone write that part for you Then emphasize that you're a first world gringo Who's an expert in polishing a person's English conversational skills And toning down their Spanish accent Down here, everyone wants to speak English without a Spanish accent The fainter of the accent, the higher class you're perceived to be Here's something that'll drive that point home Every so often on TV, there'll be an interview with a Latin celebrity A TV or soap opera star, whatever So they're big stuff down here in Latin America But total unknowns up in the States Now, occasionally the interviewer will ask this Now that you're a huge star in Latin America When are you going to go to the States And try to break into English speaking Hollywood? Because you see, for Latin stars and celebrities Hollywood is beyond the gold standard
[15:36] Like reaching for the moon Even though most first worlders with a brain Know that most people in Hollywood are brain dead, pustulant, Kardashianoids And the answer is always the same No matter how big you are in Latin America You'll never break into the US media The Anglo-American Hollywood media If you speak English with an accent In fact, only a handful, maybe three or four Latin stars have ever done that Lightning does strike once in a while Now, where were we? Oh yeah, we were talking about English tutoring Well, bottom line on that Upscale parents are willing to pay To have their kids English polished So that they speak more perfect Anglo-Gringo English So then how much can you make hiring yourself out as an English tutor? Well, if you notice the bulletin boards in high-end districts Where they have high-end malls and such
[16:22] Occasionally you'll see an English tutor ad posted But it's usually a pathetic piece of marketing Because it's in English-speaking Latin putting up the ad And the way you'll do it of course is You'll put right up front and center that you're a gringo from the first world And you're going to teach them how to polish their English And speak like a real gringo With an emphasis on proper conversational English and gringo business English That'll grab them And if the students come to you, you can charge 10 to 15 bucks an hour And if you go to their home, 20 to 25 bucks an hour And by the way, after a while Word will get around the neighborhood and you'll have their friends and family Calling you for tutoring too Provided you don't get caught stealing their silverware And by the way, the maid will probably cook dinner for you once in a while too Yes, that happens all the time
[17:08] And by the way, I know a gringo who only teaches two days a week And he makes plenty enough dough, he says, to live a first world life Now, there's another way to teach English too And that would be in the medium and large-sized Latin cities Who have call centers You see, call centers are always looking for real first world gringos To polish up the actual slugs on the phone with their headsets Now, these big call center outfits really want their call center grunts To speak English as perfectly as possible And they're never going to accomplish that unless they hire first world gringos To give on-site classes Now, when you see them advertising for call center grunts in the local newspapers They say right there in black and white You only need to have 70 to 80% English fluency So who do you think trains them up to 90% or more? And who will be teaching them commonly used gringo telephone social skills?
[17:56] That would be someone like you And what do those jobs pay? Probably $800 to $1200 a month Now, the last most common way to teach English in Latin America Is to get hired at one of those English teaching academies They're all over the place down here, especially in the large and medium sized cities Franchises like Berlitz and Harmony and Oxford, etc. And they pay $5 to $10 an hour But almost none of them ever give you more than 20 hours a week And gringos I know who have worked those places don't last long They say the management usually screws them out of hours and time Okay, that said, let's change gears a bit If you remember just a few shows ago I talked about credit cards and quick loans and loan sharks in Latin America Well, here's a related article that ties into all that And it's all about how Latin Americans without the dough finance their way through coyotes
[18:46] To get into the US illegally Now, we hear numbers like 2, 3, 4, 5, even $10,000 to pay a coyote to get you there safely And you have to wonder, how do these dirt poor people finance that stuff? How is it possible for them to come up with that kind of cash? Well, here's an article that kind of tells it all and here's the title Illegal immigrants rack up debts to chase their dreams And have few options when things go wrong And I'll paraphrase this, it starts out Annabel Salazar drives a cab at night in Guatemala's second largest city, Quetzaltenango He has four children and last year took out a $2,600 loan against a piece of land he owns In order to pay a people smuggler a coyote to take him to the US Salazar was one of a group of five, each paying the same amount
[19:34] For many who attempt the journey, the cost is much higher And fees exceeding six, even $10,000 are common And it works like this, generally, the agreement for these trips Is that one gets three chances to cross the border with a coyote So you pay the dough and you get three shots at it However, in his case, he was intercepted in Reynosa, Mexico near the border with the US And his companions and him were returned to Guatemala A few days, however, before the group was to make the second run Salazar was hit by a car and hospitalized and unable to rejoin his comrades He now has a debt payment he struggles to pay each month He says he pays the coyote's lender $150 a month for the debt
[20:20] But he only earns around $400 a month in his taxi Plus he says he pays $60 a week to rent the taxi And he's got more than two years of monthly payments to the coyotes before his debt is retired So the question remains, how can Latin governments or any government Police an out of control system that's inherently illegal A spokesperson for the Public Ministry Enforcement Unit, Francisco Cotton He says Latin Americans just do not file complaints against coyotes Duh, I wonder why? That's me Boy, what an idiot, he belongs in government, huh? Anyway, he says without formal complaints the agencies can't investigate Any kind of complaint against an illegal activity often reveals a much bigger problem
[21:06] He cited a case of fraud that led to catching an operation's ringleaders Who had scammed over a hundred people with the promise of Canadian work visas Alright, let's stop for a second, it's me again Now you might remember I mentioned in a past show, maybe a year or so ago That I saw ads all over Latin newspapers myself Showing an ice-tailored first world couple all dressed up Offering seminars on the weekends that were four hours long by the way Promising Canadian work visas and Canadian residency permits They were playing to standing room only in hotel salons all throughout Latin America at 50 bucks ahead So scams like that do abound Okay, back to the article Complicating matters further Judges in Latin America have been denying fraud cases focused on payments to coyotes
[21:53] Then it says the only tool Latin states have is the national crime of usury That is charging interest rates higher than the rates approved by the national banking authorities Then it says prosecuting most of these cases is futile Because notaries make changes when they draft these documents so that the illegal usury part Those illegally high interest rates are disguised as the capital or principal That is for example if they're lending $2,500 but they write it up as $5,000 And that base of $5,000 is what the interest is calculated on When the amount lent was really only half that or $2,500 They can hide double the interest in that document Then it goes on to say while few people file any complaints at all
[22:41] The issue of extra high interest rate migrant debt is widespread throughout Latin America In fact it says 75 to 80 percent of all migrants surveyed have paid coyotes To take them or their family members to the United States Wow did you get that? 75 to 80 percent I guess that's why one in four people born in Mexico are now living illegally in the US Then it says nearly a quarter of these people paid coyotes more than $6,000 Some 80 percent took out loans in order to pay smugglers And nearly 40 percent obtained these loans from informal lenders and loan sharks And this is the part that will kill you It says the reason so many turn into loan sharks Is they don't meet banking financial institution requirements for a loan
[23:27] Duh, yeah right Like you're going to go to a bank and say hey I need $4,000 Because I'm going to sneak into the United States illegally Can you make the loan? Well don't laugh Latin banks actually do make loans like that Especially if the guy or gal or their family has land or a house Or some collateral like cows for example Then it says most who try to attempt to reach the US illegally will fail And will try again Often several times These efforts will put families into greater debt Because they'll pool their resources And they'll consume what assets they have Before the so called debt slash migration cycle begins A government spokesperson said basically this is an issue of organized crime Where there are illegal coyotes
[24:13] Illegal money lenders and illegal recruiters Loan contracts are often written as purchase agreements Putting borrowers at additional risk Since they have legally sold their land or their homes To the coyotes for the trip In fact coyotes often employ their own recruiters To find people who've got homes or land or cattle Anything of high value so they can offer to collateralize it in their pitch When they offer to smuggle a person into the states And it turns out the monthly interest on these coyote loans Ranges from 5 to 20% With 10% being the most common rate Official financial institutions often offer alarmingly high rates as well At least partially because of lack of regulations and oversight
[24:59] So whether you finance it through the coyote and his money lender Or through an official financial lending institution The average interest rate is around 120% a year And it's not only banks that are lenders In a recent report in Contra Poder magazine They say that one rapid loan service called Chepe Te Presta Which by the way translates to Joe will lend you I like that And they charge the interest equivalent of 4 times the amount they lend Along with terms that can involve the right to seize any collateral Without a warrant So then you might be thinking What about the guy who's leaving for the United States permanently Isn't he the worst risk of all? I mean, he's gone, right? Well, if it involves a bank or a legitimate lending institution
[25:44] Like, for example, Joe will lend you The traveler or his family will be putting up a lot of collateral in case he skips And if the coyote himself is the lender Or a local loan shark is the lender They won't shell out the dough Then they'll check out the available assets And make sure they get plenty of co-signers And if the payments stop, the enforcers come in Now, according to researcher Sandra Xuc Norado From the Latin American Department of Social Sciences She says there's virtually no legal oversight in these cases And thus, few grounds for lawsuits She says, quote, I try to identify to find a law Some government body that regulates excessive interest rates
[26:30] But I never did find one Such laws do exist in certain Latin American countries But I'm unaware of where to find them What they say and what exactly they are However, she said she found the cheapest interest rates Were from 10% to 30% a year with credit unions But only for workers belonging to that union And she says lenders know that if borrowers make it to the US They will repay that money And as for all those loans from banks And legitimate lenders to pay for coyotes The paperwork has to state the reason for the loan But it's not stated clearly However, bank loan officials are well aware The money is going to be used to immigrate to the US illegally Hmm, okay, we're getting to the end now So don't forget to go to www.thenewexpet.com And check out expert blogger John Galt
[27:16] And all the special things he's got for you on that site And don't forget to go to my Expat Files YouTube channel And check out the slides that go along with the audio Do subscribe, it's free, you know And by the way, V-W-Y-F You've been listening to The Expat Files Living in Latin America Coming to you twice a week from somewhere south of the border Email me, theexpatfiles at gmail.com And if you want me to help you sort out your own Latin American plans Schedule a one-on-one consult with me Just send an email and let me know at theexpatfiles at gmail.com Nos vemos!