Living in a foreign country is exciting as it is quite terrifying and lonesome. It can be the latter for many foreigners because they don’t have access to the typical financial services available to them in their home country. Fortunately, Singapore foreigner loans allow non-citizens to receive financial aid in one of the world’s most expensive countries.
Banks and other licensed institutions, such as moneylenders, can provide a loan for a foreigner in Singapore as a personal loan. This service is helpful, especially if you’re looking to bridge your budget gap due to sudden financial emergencies.
What is a Foreigner Loan
According to Singapore’s constitution, a foreigner is an individual who lives in Singapore as workers, students, or permanent residents not born in the country. They enjoy different rights from Singaporeans. You can assume that financial institutions and lenders have different requirements for foreigners loan in Singapore too.
For any foreigner applying for a loan in Singapore, they’ll need to meet higher minimum incomes, interest rates, and additional requirements that give financial institutions confidence that they can handle their repayments.
Can Foreigners Get Loans in Singapore?
Yes, they can. Both banks and other lenders can provide foreigners with financial aid. However, banks are less likely to approve foreigner loans. They have an untold loan amount limit for foreigners, which aligns with the same amount offered by licensed moneylenders in the country
Banks reject foreigner loan applications most of the time because foreigners have no credit history. In turn, banks cannot grant them higher amounts by approving the reviewed foreigner loan application as swift as possible unless they have a local Singaporean guarantor.
How Do Foreigner Loans Work?
Like typical Singapore personal loans, foreigner loans can pass an application for a personal loan in Singapore. Then, they’ll also submit documents and other legal proof of their employment, income, and length of stay in Singapore.
Guarantors can help foreigners without any credit history or have difficulty retrieving their foreign credit history. Additionally, foreigners whose documents show they must stay longer for their Singapore employment often receive favorable results.
What Types of Loans Are Available for Foreigners in Singapore?
Banks provide a wide variety of foreigner loans in Singapore. Truthfully, these products are similar to the offerings of most licensed moneylenders. Here are some of them below:
1. Standard Chartered CashOne Personal Loan
Foreigners who have over S $60,000 annual income can apply for Standard Charter’s foreigner-friendly personal loan. It comes with a 7.99 effective interest rate and a minimum loan amount of S $1,000. Foreigners can apply for up to four times their monthly salary or within the maximum of S $250,00.
2. OCBC Personal Loan
This product is a more affordable and reachable foreigner loan in Singapore. OCBC’s financing provides foreigners up to six times their monthly salary and has a lower effective interest rate of 7.27%. Additionally, foreign workers only need to have S $45,000 annual income for a successful application.
3. Citi Quick Cash Loan
With a higher effective interest of 8.5%, Citi’s foreigner loan in Singapore provides up to four times their monthly salary if they earn S $42,000 yearly. While higher than the other interest rates in this list, it’s accessible for most foreign workers in the country to have a substantial financing amount higher than a licensed moneylender can offer.
4. HSBC Personal Loan
The most accessible of all foreigner loans in this list, HSBC’s offer requires foreign workers to have only S $40,000 in total yearly income. They can apply for up to eight times their monthly salary up to a maximum of S $200,000. Furthermore, its effective interest rates have a cap of 7.0%, making it one of the best deals in this list.
What Are The Requirements for a Foreigner Loan Application?
In most cases, banks and money lenders will ask you to provide specific loan application requirements. The supplementary documents they require aims to establish items and data you declared.
Here are the frequent information and documents lenders will ask from you. Make sure to prepare and keep them ready at all times. You can expect licensed moneylenders to ask these requirements from you as well.
- Valid Singapore Work Pass for Foreigners. A PEP, E-Pass or S-Pass works)
- Above 21 Years of Age
- Employed Full Time
- Present a Residential Tenancy Agreement
- Provide a bank statement reflecting your activities in the last six months
- Employment Letter of Offer
- Payslips in the Last 3 Months
Banks and money lenders might ask for all or only some of these documents. However, you can be sure that they will always ask you to provide your work permit and residential tenancy agreement. These establish the foreign worker’s monthly pay, address, and length of stay in Singapore.
Factors to Consider Before Applying For a Foreigner Loan
It’s easy to find many offers for foreigner loans in Singapore. However, finding the best foreigner loan takes some research and an in-depth look upon essential details.
One of them is your pay amount and employment. If you have a shaky or unstable source of money as a foreign worker who freelances with bouts of vacancies, banks may reconsider having to lend money Singapore. This situation is also true if you’re processing your foreigner loan application with more than one moneylender.
Furthermore, be aware that interest rates can inflate your prospective foreigner loan to higher levels. The effective interest rate is an amount separate from the loan’s principal. You might pay as much as 7-8% on top of your principal by the end of the loan tenor.
Here is everything you need to consider in full detail.
1. Interest Rates
All loans have interest, but if you pay them in full for the shortest amount of time possible, the interest amount in Singapore becomes lower. A foreign borrower must consider the effective interest rate the bank applies to its financing yearly. If they can make calculations and establish scenarios of missed repayments in addition to penalties, they can calculate the total expenses they will possibly incur by taking out their current financing.
Not paying attention to interest is one of the many ways foreign borrowers fail to pay back their loans. Additionally, they deal with higher interest than local borrowers, making them more susceptible to land into deep debt.
Therefore, as a foreign borrower, make calculations on your prospective loan’s interest rates. You can prevent possible financial drawbacks from questionable decisions and spending by doing so.
2. Available Instalment Plans
We listed the best bank-advertised foreigner loan offers earlier. However, if you have good standing, and your documents show that you can pay for any bank-offered foreigner personal loan without problems, you can receive offers for higher financing — complete with instalment plans.
Instalment plans make it easier for foreign borrowers to pay their debt. However, it can make their loan repayments higher due to their principal’s significant interest amount. On the other hand, it gives many foreign borrowers in the Singapore breathing room to carefully plan their finances.
Then again, banks are unlikely to advertise loans for foreign borrowers in Singapore with instalment plans. If you’re planning to take out a foreigner loan, contact your bank and ask them if you qualify for their instalment programs.
3. Your Income-to-Debt Ratio
Most Singaporeans and foreign workers forget to consider their income-to-debt ratio before they apply for a personal loan. Many bank-rejected applications come from borrowers who fail to calculate this ratio
To know your total pay, you’ll need to get all the amounts you can receive from different sources. Once done, you’ll need to add all the monthly utilities, additional expenses, and other items and high costs you’ll need to address in the coming years.
If your total expenses go beyond 50% of your monthly pay, banks will reject your application. Even moneylenders will ask you to get additional sources of monthly pay to have better chances of approval.
4. The Crucial Use of Your Financing
Lastly, it’s easy to find loans in Singapore, even if you’re a foreigner. However, taking on debt to resolve your financial problems isn’t the best route — unless you have enough monthly pay to address it in one or two months.
For example, you receive approval for a foreigner loan amounting to S $20,000 with a monthly interest of 8.2%. You can’t pay for this amount in just a single month. Furthermore, if you take more than two years, you’ll be paying an additional S $8,000-S $9,000.
Therefore, make sure to only apply for loans if you’re in critical need of money. Great uses of a foreigner loan include making investments to grow your money or paying for your rental deposit fee.
What is the Interest Rate of a Foreigner Loan?
Most foreign borrowers in Singapore are surprised when foreigner loans have twice the interest rate Singaporeans deal with in most personal loans. Unfortunately, foreign borrowers cannot hope to lower these interest rates because those values are fair for financial institutions as well.
Foreign borrowers are high-risk entities when you compare their assets and liabilities to a Singaporean citizen. These borrowers have no reason to stay in Singapore until they finish their employment. Furthermore, they have higher incomes and can leave the country at any time.
Additionally, foreign borrowers have no tangible assets in the country. Without collateral, banks cannot liquidate equities that can tide them over until the foreign debtor can pay off their financing ultimately. A higher interest rate discourages foreign borrowers from taking advantage of banks and guarantees only those who genuinely need the financing receive a fair chance.
How Do I Find Dependable Licensed Money Lenders?
Singapore’s government recognizes local licensed moneylenders and their help in stimulating the country’s economy. In this light, virtually every moneylender in Singapore is legitimate. To be sure, you can check the Ministry of Law’s Registry of Moneylenders to see a complete list of trustworthy money lenders you can depend on for excellent financial services.
Moneylenders you can count on do not do the following:
- Reach out to you and offer a loan amount using email, chat, or SMS
- Advertise their service in local markets through wall-posted bills
- Advertise their services on social networks
If you encounter any lender that offers these services, you will likely deal with an unregistered loan shark not under the jurisdiction and regulation of the Ministry of Law.
It’s Never Difficult to Find and Compare The Best Lenders Around
Singapore’s many moneylenders might make it difficult for a foreign borrower to make the best decision on who to trust with a foreigner loan. Fortunately, Loan Advisor’s comparing system has all the registered moneylenders of Singapore in one website. You can check their offers and compare their rates and specifications against each other conveniently. Learn more by visiting our website today