As a foreigner, looking for loan options may be complicated if you do not have a firm grasp of local financial laws and norms.
Make sure you understand what type of loan you are applying for and that it fits within your financial situation. In this loan guide for foreigners in Singapore, we’ll provide you with the essential information.
What are foreigner loans?
A foreign loan is essentially a personal loan for foreigners. It is a personal loan that gives foreigners access to the financial support they can use to acquire emergency money.
If you are a foreigner living in Singapore, this type of loan can help you pay for everyday expenses, including housing, rent, transportation, food and even medical care, like most personal loans.
Like personal loans, it can also be a great way to solve financial problems without resorting to credit card debt. And, if you have trouble paying your bills on time (and your credit score requires little help), a loan can help push those payments along.
Who qualifies for a foreigner loan?
Loans can be made for almost any sort of business and personal purpose, with short notices and low fees. But before you dig into the fine print, keep in mind if you’re eligible to take out the loan.
Personal loans for foreigners are available to individuals who have a stable income, as well as those who already have a limited amount of credit in their name.
These individuals can apply for a loan at any time, although there are sometimes special conditions that must be met prior to approval. Financing can be provided by banks, financial institutions or licensed money lenders.
Eligibility and Requirements
To be eligible for personal loans for foreigners, you must:
- Be between 21 to 55 years old
- Have an employment pass with 1-year validity
- Have a minimum annual income of $40,000 – $60,000.
You will need to provide the following information with your application:
- Proof of identity. Your valid passport and an employment pass at least 6 months before expiry.
- Proof of address. This can be in the form of your most recent telephone bill, utility bill or bank statement.
- Proof of earning as a salaried employee. You’ll need either your latest CPF statement with at least 3 months of contributions from your monthly salary showing and your latest income tax assessment – or your latest payslip plus a bank statement showing the money being credited, your latest CPF statement, or income tax assessment.
- Proof of earning if you’re self-employed, on commission, or earning variable amounts. You must show your last 12 months CPF contribution statement or your latest income tax assessment.
- Proof of earning if you have less than 3 months of work experience. You must present a company letter confirming the start date and salary, as well as a bank statement showing the salary being credited
The application process for a personal loan for a foreigner varies from bank to bank–you might find a lower minimum annual income requirement in some banks compared to others.
But one thing that seems important is your ability to support yourself financially. That means you can apply even if you have no local credit history, but make sure you meet the other requirements.
How is a foreigner loan different from a personal loan?
As mentioned earlier, a foreigner loan is not unlike a personal loan. Both types of loans require applicants to submit original documents and pay a set fee. But there are some key differences in terms and conditions between the two types of loans.
The main difference is that borrowers of foreign loans are not citizens or permanent residents of the country granting the loan, which is what sets them apart from other conventional personal loans. There are generally stricter guidelines and policies accompanying this, which is why foreign applicants need to meet a higher monthly salary requirement.
If you’re a foreign borrower, you can also expect that your financial institution may require other specific documents to support your application for personal loans in a different country.
Where can foreigners in Singapore get personal loans?
It’s important to choose the best option available to you. Checking the local institutions will be one good place to start when you are looking for personal loans for foreigners.
In Singapore, these are the 4 most prominent banks for foreigners looking to bag a loan, along with their loan details..
|Banks||Foreigners’ minimum annual income||Annual Interest Rates||Effective Interest Rates||Processing fee|
|OCBC ExtraCash Laon||S$45,000||5.42% p.a. to 5.54% p.a||12.11% EIR to 10.96% EIR||200|
|Citibank Citi Quick Cash Loan||S$42,000||3.99% p.a.||7.5% EIR||0|
|Standard Chartered CashOne||S$60,000||3.88% p.a.||7.56% EIR||0|
|HSBC Personal Loan||S$40,000||3.8% p.a.||7% EIR||0|
There are many banks to choose from when it comes to funding your loan. It is important for foreigners in Singapore to carefully consider their needs and weigh them against the competitive edge and reputation of the bank loans on their list of considerations.
The interest rate is crucial as it will determine how much you pay while paying off the loan early. You may have to pay more or less depending on your credit score and credit limit.
Also, certain banks offer a cheaper loan with a better deal for borrowers with poor income and bad credit histories. To make sure you don’t miss any opportunities, determine which best suits your needs by comparing the offers of different banks.
What is the best personal loan for foreigners in Singapore?
If you’re looking for a loan that you can pay off in instalments, consider the HSBC personal loan. With a loan repayment period of up to 7 years, the HSBC personal offers the longest repayment period among the 4 banks mentioned.
The required minimum income for foreigners under this loan is also comparatively lower than the rest, which is S$40,000. In addition, you can apply even if you do not have an HSBC account, which increases the ease of applying for this loan.
Alternative option: Licensed Moneylenders
Moneylenders are involved in hundreds of different financial transactions every day, making them capable of providing much better service than what the average person receives from their bank.
With little to no high credit scores required, fast disbursal, and quick loan application approvals, Moneylenders strive to deliver their clients efficient financing solutions with as little hassle as possible.
A licensed money lender is typically less strict than other financial institutions, so this could be an excellent option for foreigners who are looking to borrow money in Singapore.
It is also essential that whichever option you decide to pursue, make sure that you verify the legitimacy of the lender. The risk involved in taking out an illegal loan involves detrimental consequences; therefore, it’s vital that you confirm their registration on the Monetary Authority of Singapore (MAS) moneylenders registry and avoid any unnecessary trouble.
How to Choose the Best Foreigner Loan for You
While we’ve established that the HSBC Personal Loan is objectively the best loan for foreigners in Singapore, other personal loans in Singapore can be more ideal depending on your specific situation. Financing is not a one size fits all approach, after all, and there is no one correct type or size of financing option for everyone.
There are multiple options to choose from. So if you are from a foreign country, it is best to consider the following factors listed below first before choosing among the different personal loans in Singapore.
Lenders look at several factors when determining your maximum loan amount, including your spending patterns, income, assets and property, credit history and debt service.
For example, if you have recently lost your job and are behind on your bills, your lender may require that you prove that you have the financial ability to make your monthly payments. This is the reason why most banks impose a minimum annual income.
Knowing exactly how much you need to borrow is crucial when it comes to applying for a loan. It largely depends on how you’re going to spend the borrowed funds.
Interest rates are calculated based on the amount of money borrowed and the loan tenor. With various factors being taken into account, it’s important to understand just how much interest you’ll face on any given loan or line of credit.
Study the interest rates offered by various lenders and determine what you can realistically manage.
Repayment Period/Loan Tenure
The loan tenure (or loan tenor) the amount of time it will take to pay off the capital, minus any fees or instalments that you may owe. The length of time you have to repay depends on the loan’s interest rate, which is expressed as a percentage of the original principal.
The higher the interest rates, the greater the burden you have to carry until you pay it off. The more difficult it is for you to make monthly instalments pay off your loan in full – and the greater the risk that you will never be able to pay it off.
The total cost represents all costs involved in the personal loan program, including interest rates, processing fees, and others. So make sure to calculate if the total cost is within your financial capability.
Frequently Asked Questions by Foreigners looking to loan in Singapore
How much can a foreigner borrow in Singapore?
The average maximum loan amount a foreigner can acquire in Singapore can be 6-10 times their monthly salary. Interest rates, eligibility, and other factors determine the foreign applicants’ loanable amount from financial institutions.
- Can an S-Pass holder apply for a loan?
Short answer, yes. Different lenders have varying requirements to apply for a personal loan for a foreigner, but among the most basic and common requirements for foreigners is an S-Pass.
- Where can I get a foreigner loan in Singapore?
Personal loans for foreigners are offered by commercial banks and some private lenders under certain conditions. Supplements are available to those who can afford them, while government loans are available to those who qualify.
- Can you have more than one personal loan at a time?
Don’t get too fixated on the number of loans you can have, but how much they are worth. According to the Monetary Authority of Singapore (MAS), unsecured loans can only be worth up to 12 times your monthly income. You can be denied any additional credit if your total unsecured debt is 12 times the amount of your monthly income.
- What is the fastest way to get a personal loan?
In general, you can get a personal loan approved and receive cash from the bank and moneylenders in a short amount of time. The approval duration of personal loans for foreigners takes as fast as a minute, and loan disbursement averages around 1-5 working days, depending on the financial institution you applied to.
The Bottom Line
- You should only apply for a loan only if you can afford to repay it and in a reasonable period of time. The best way to avoid getting into financial trouble is by making smart spending decisions and monitoring your balances regularly. Develop a monthly payment plan which factors in your monthly income to make sure your payments are well budgeted.
- Interest rates, maximum amount, loan tenure are just a few of the things that foreigners should consider when they are considering taking out a loan in Singapore.
- The top 4 banks offering the best deals for foreigners in Singapore are HSBC, OCBC, Citibank, and Standard Chartered One. HSBC provides the most competitive rates.
- Do your own research according to your own specific needs.
At the end of the day, your personal preference and circumstances will determine your best solution. If you can’t find loan details on the types of financial products available at different financial institutions or moneylenders, you might have to contact them personally to get more information.
The good news is that Instant Loan makes it easy for foreigners to find a loan that works for their specific needs. Their comparison tools will help you learn more about your options, and their customer service team is available any time to answer your questions.