Qualifying for a loan as a foreigner is no walk in the park. You have to fill out multiple forms and give your lender all sorts of documents to prove your residence, income and employment. However, when you need money to pay for school or cover a large expense, you have options. Take some time to compare each loan type available to foreigners living in Singapore.
For lawful permanent and non-permanent residents, applying for a loan is the same process as for citizens. There are no higher costs or fees, though interest rates may vary.
However, the process depends on the lender and type of loan you choose. Generally, foreigners need to submit documents proving you’re in Singapore legally and might have to apply with a guarantor if you don’t already have a credit score.
If your lender offers loans to foreigners, you typically need to have:
A foreign identification number (FIN). You’ll need to provide your FIN when you apply for a loan, which you should have after completing a visa application.
An eligible visa. Some lenders are willing to work with foreigners with a valid visa but impose a higher minimum income requirement.
Remember: Not all lenders are willing to work with non-residents — even with a guarantor.
Restrictions for foreigners
Even when you find a lender that works with foreigners, you may face some restrictions. As a foreigner, you might run into the following roadblocks:
If you don’t have a consistent credit history. You may be required to apply with a guarantor
If you’re a foreigner who will be in Singapore for a limited time, approval for a loan may be hard
If you’re not earning a comparatively high income, you may not be able to meet most lender’s eligibility requirements
How to get non-traditional credit references
For many foreigners, it may be possible to get a non-traditional credit check. This could help you get a loan without a credit score. You will need sufficient non-traditional credit references, and your credit accounts must be free of late payments, collections or foreclosure. Non-traditional credit references can include:
Your rental history
A history of payments for such utility bills as gas, electric, water or cable TV
Non-payroll-deducted medical, life, auto or renters insurance
You should gather at least three non-traditional credit references, each showing 12 months of on-time payments, to submit with your loan application.
Personal loans for foreigners
When applying for a personal loan in Singapore, you’ll quickly realise that they aren’t designed for foreigners. But there’s good news: you’re still eligible to apply for some personal loans, including car loans. Just be prepared for plenty of paperwork.
How does a personal loan for a foreigner work?
A personal loan for foreigners is similar to a personal loan for residents: If approved, you can use the money you receive to cover almost any expense. You pay back the principal amount — the money you borrowed — plus interest over three to seven years.
For a temporary resident, like someone on a work visa, you may need to meet extra criteria in order to qualify. Most lenders will need the details of your visa before you’re approved to ensure that the terms of the personal loan don’t exceed the amount of time left on your visa. You may also need to meet higher minimum income criteria.
The paperwork required to fill out your loan depends on the type of loan you’re applying for and the lender you’re applying with. In general, loans are only granted to people who plan to continue working in Singapore for at least three years or through the duration of the loan.
4 types of personal loans
As a foreigner, you can apply for four main types of personal loans. They can be used to get you through a financial pinch or to build your credit for larger loans, especially if you plan on staying in Singapore for a long period of time.
Unsecured personal loan
An unsecured personal loan isn’t backed by any collateral and can be used for almost any purpose. And while your interest rate will likely be fixed over the life of your loan, you may have to pay a higher interest rate than with a secured personal loan.
Up to S$100,000
Secured personal loan
A secured personal loan requires you to provide an asset as a guarantee — like your car or home. It protects the lender by allowing it to repossess and sell your asset to recoup its losses if you default on the loan. Because of this, it generally has lower interest rates than other types of personal loans.
Up to S$100,000
With repayment terms of two to four weeks, payday loans are typically for smaller sums of money. However, because they’re meant for borrowers with bad credit or a limited credit history, interest rates can be quite high.
Up to S$1,000
With a set number of payments over a scheduled period of time, instalment loans can last for a few months or more. An instalment loan is usually as expensive as a payday loan, but you’ll have more time to pay it back. Best of all, some lenders even report your on-time payments so you can build your credit.
Up to S$5,000
Student loans for foreigners
Whether it’s NUS, NTU or SMU, the opportunity to study in Singapore can open many doors. But if you can’t afford the cost of attending a university in Singapore, an international student loan may be able to help.
Do I still need a credit history as an international student?
As an international student, you likely haven’t built up a credit history in Singapore. Lenders don’t require you to have excellent credit, but you might be required to have a Singaporean guarantor. Your guarantor will legally sign loan papers in order to help you to obtain a loan.
Because guarantors are jointly and legally responsible for repaying the loan, they must have:
Good to excellent credit
Proof of Singapore citizenship or lawful permanent residency
Proof of income
Proof they’ve lived in Singapore for two years or more
How can I find the best student loan for my needs?
Not all loans aren’t created equal. You’ll need to do your research and compare your options before making a final decision. These factors will usually play the biggest role when you make your final loan decision.
Interest rate. One of the most important factors to consider is the interest rate. It’s not always easy to compare them, but a loan with a low interest rate may be a bad value if its fees are too high. Likewise, a loan with a high rate and low fees could be an exceptional value.
EIR. Don’t ignore the loan’s effective interest rate (EIR), which reflects the interest rate, fees and other charges to establish the loan. This is often the most useful tool when comparing loans.
Loan term. While a longer loan term decreases your payment month-to-month, it does increase the amount you pay in interest over the life of your loan. A shorter term decreases the amount of interest but ups your monthly payments.
Monthly payment. Loans with variable interest rates or balloon payments typically have lower monthly payments, but these often come with other costs. A fixed-interest loan is much more common and allows you to budget your monthly payments without stress.
What happens after I get my loan?
After you’ve completed your loan application and submitted all the necessary paperwork, your lender may take a few days to a few weeks to process your loan. If approved, your funds may be available as soon as the next day, but it usually takes longer.
You can stay on top of payments by following these tips
Create a budget. A budget can help you both save for monthly payments and remind you not to overspend.
Enrol for automatic payments. With autopay, recurring payments are deducted from your bank account and electronically sent to your lender. It’s the easiest way for you to pay off your loan while avoiding late fees.
Avoid missing payments. If you think you won’t be able to make your monthly payment, contact your lender as soon as possible. It may be willing to explore ways to help.
Getting a loan as a foreigner involves a lot of paperwork and time. But when you’re in need of money — no matter what it’s for — there are options out there for you.
Be prepared to compare your options to find the best deal. And once all is said and done, you’ll be well on your way to getting the funds you need to settle in, whether that’s for a few years or a lifetime.
Frequently asked questions
As a foreigner in Singapore, a guarantor is required to apply for a student loan. There are some loans available for international students without a guarantor, but these are difficult to qualify for. You may also want to consider a scholarship if you’re eligible.
It depends on the lender. Most lenders don’t have higher interest rates, but others can increase rates by 0.5% to 1%. Interest rates on mortgages for foreigners are often higher than the average Singapore interest rates.
Aliyyah Camp is a writer and personal finance blogger who helps readers compare personal, student, car and business loans. Aliyyah earned a BA in communication from the University of Pennsylvania and is based in New York, where she enjoys movies and running outdoors.
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