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Personal loans for non residents
There are still personal loan options for you if you aren't a citizen or permanent resident.
Migrating to New Zealand, whether permanently or temporarily, can be a daunting experience. You might be faced with cultural challenges and learning how things work in your new country, so the last thing you want is to run out of options when it comes to finance.
In New Zealand, while you can’t access all types of finance if you’ve just immigrated, you may still be eligible for a personal loan with some lenders.
Personal loans migrants and non residents may be able to apply for
How does a personal loan for non residents work?
Personal loans for migrants or non residents are not offered by all lenders, but you can find some traditional banks, credit unions and smaller lenders that are able to help. As a migrant’s lending risk cannot be determined in the same way as a New Zealand resident’s, due to the fact that they don’t have a credit file, the lender will use other eligibility criteria.
This may include requiring the migrant to have confirmed employment in New Zealand, confirmed minimum income, a New Zealand bank account and a New Zealand work visa.
If you are on a temporary visa and looking for a loan, the length of the loan will not extend past the length of your visa. For example, if you have two years left on a temporary work visa, then you will only be able to secure a two-year loan.
Major banks often have a department dedicated to migrant banking, with experts that can help with opening accounts, transferring funds, loan and credit card applications. Do your research before coming to New Zealand, so you know which bank to approach when you arrive.
Types of personal loans available for non residents
Migrants or non residents are able to access a few different types of personal loans when they move to New Zealand. Depending on the type of visa you hold, your income and your financial situation, you might be able to apply for the following:
- Car loan. Car loans are a common need for new migrants, as a car is often needed to be purchased soon after moving. Most lenders will approve car finance for migrants who hold a temporary work visa, depending on their individual financial situation.
- Secured personal loan. You can use other assets, such as jewellery or property, in order to access finance. This is referred to as a secured personal loan. The difference between a secured vs. car loan is that you are not as restricted in the way you use your loan amount.
- Unsecured personal loan. An unsecured personal loan does not require you to use an asset as security for the loan, although this means the loan usually comes with higher interest rate and fees. Unsecured personal loans usually have stricter eligibility criteria, although some lenders still may approve these loans for non residents.
- Payday loan. A payday loan is a small short-term loan, usually between $100 and $2,000, with loan terms of between 16 days and four months. As the loan amounts are small, lenders usually have more flexible lending criteria with these loans, and so you may be able to access these as a migrant.
How to compare personal loans for non residents
- Loan terms and amount. Lenders offer varying lengths for loan terms and have different minimum and maximum loan amounts. Check that what’s on offer will meet your borrowing needs.
- Fees. You will be charged various fees for the loan that can add considerably to the overall cost. Some of these fees may be ongoing, such as monthly fees, and some may be one-off, such as loan establishment fees. Calculate how much you are likely to pay and if you can find a loan where you will pay less.
- Loan purpose. Personal loan products are designed for different purposes, and you’ll need to ensure that the reason you need the loan is allowed. For instance, many lenders will not allow you to use any money you borrow for a car loan for any other purpose than to finance a vehicle.
- Repayment flexibility. Most lenders let you choose between weekly, fortnightly or monthly repayments to line up with when you receive your salary or wages. You should also check if your lender will let you make additional repayments or pay back your loan early without penalty, as this could save you considerable interest.
- Additional loan features. Some lenders may also offer you additional features with your loan product, such as discounts on insurance or a redraw facility.
- The lender. The reputability of the lender should also be a factor in your decision. If anything goes wrong over the course of your loan you’ll want to be sure the lender can be easily contacted, and that they’ll be able to provide you with assistance. Check its credentials and look at online reviews from previous customers.
What to avoid
There are a wide range of lenders, including the major banks, who offer personal loans for migrants and non residents. You should avoid ‘dodgy’ lenders who claim that you will not be able to find a loan with other lenders, and then offer you products with higher rates and fees. Avoid applying for any loan products without doing your research and comparing your options first, because you may be unaware of the loan market in New Zealand and could sign up to a product that isn’t competitive.