Some foreign workers come to Singapore for long working periods without bank loans. They might be making a living in Singapore, but they’re not eligible to borrow any loans from banks. As a result, they cannot apply for a personal loan with any bank in the country as easily as Singaporeans do despite being a major Singapore economic backbone.
Foreign workers make up a significant chunk of Singapore’s economy. However, many workers face financial troubles that every Singaporean regularly does. Unlike Singaporeans, foreign workers have zero financial recourse that lets them juggle their finances. That is until foreign-oriented loans made life easier for them.
Foreigner loans provide the best options because it doesn’t require credit history or collateral. It’s an easy solution that any foreign worker can use to their benefit without any hiccups. Now, they won’t have to wait for a long time to receive financing and comply with strict bank requirements.
What Are The Major Differences Between A Foreigner Loan Singapore and Personal Loan?
These financial products focus on providing foreign workers in Singapore with a hassle-free and accessible loan service. Most banks provide up to six months of a foreigner’s monthly salary after they prove their eligibility with supporting documents.
Banks and other financial institutions only make personal loans available for Singaporeans because of their readily available credit history from Credit Bureau Singapore. Borrowers in Singapore will receive up to six months of their monthly salary, just like a foreigner loan.
5 Of The Best Foreigner Loans in Singapore In 2022
|Financial Institution||Annual interest rate||Effective interest rate||Loan Amount and Tenure||Minimum Salary Requirement.|
|OCBC||Starting At 5.42% up to 5.54%||Starting at 10.96%||Six Times Your Salary. 1-5 Years||S $45,000|
|HSBC||Starting At 3.4%||Starting At 6.5%||Eight Times Your Salary. 1-7 Years Loan Tenure. S $200 Processing Fee||S $40,000|
|Citibank||Starting At 3.45%||Starting At 7.85%||Four Times Of Your Salary.1-5 Years||None|
|Standard Chartered||Starting At 3.48%||Starting At 6.95%||Six Months Of Your Salary. 1-5 Year Repayment Period.||S $60,000|
Let’s look at each bank’s unsecured loans in full detail.
OCBC’s product is for foreigners that meet the bank’s minimum annual income of or above S $45,000. They can borrow up to 6 times their monthly salary and repay it over 12-60 months. You can get an interest rate up to 5.42% yearly (EIR 12.11% yearly)to 5.54% annually (EIR 10.96% annually). The applicant’s annual income must be higher than S $30,000.
HSBC has one of the best personal loans in the market because of its low interest rate at 3.4% and zero processing fees. The HSBC Personal Loan can give you S $3,100 cash back if you’re an international applicant. The only requirements are that you have an annual income of at least S $40,000.
The Citi Quick Cash Loan is available to foreign workers with an annual income of at least S $42,000. New customers can have a low interest of 3.56% per year (EIR 6.5% annually) for a 12-month loan tenure. Promo rates depend on your loan tenure, which is between 1-5 years.
The Standard Chartered CashOne requires foreigners to earn at least S $60,000 yearly. Once you qualify, you can get up to 3.48% yearly interest (6.95% effective yearly interest rate.). Last August 2021, CashOne had a S $1,200 cashback promotion for new customers.
Alternatives to Bank Personal Loans
Banks are generally reluctant to provide financial services to those with a poor credit history or who have none, such as foreign workers in Singapore. The country’s licensed money lenders are much more lenient and can approve loans for foreigners in Singapore who meet their eligibility requirements, such as their minimum monthly income.
Here are some more details about a licensed moneylender personal loan.
- Maximum Loan Amount: Up to 6 times your monthly salary
- Interest Rates: 1-4% monthly
- Repayment Period: 6-12 months depending on your licensed money lender loan contract.
Other Charges and Fees:
- Processing Fees: Not exceeding 10% of the principal of the foreigner loan principal
- Late Payment Fees: A maximum of S$60 each month of late repayments.
- Foreigner Loans: The Application Process
Here are some details you should know about borrowing licensed moneylender financial support products in the form of personal loans.
- Age: 18 Years Old
- Minimum Monthly Income: S $2,000
- Any valid Singapore work permit / S Pass / Employment Pass
- Proof of employment (Staff pass, employment letter, utility bill, phone bills)
- Recent 3-month payslips
- Proof of residence such as a tenancy agreement, recent bill, or letter addressed to you
- Latest bank statement of account to which your salary is credited
How to Find The Best Foreigner Loan?
Before applying for a loan for foreigners, make sure you review all your options and finalize your financing priorities because loans are still significant financial commitments that can break your bank. We suggest that you consider the following before you apply for a loan.
Total Loan Expenses: These pertain to the added costs you’ll incur aside from your monthly repayments.
Interest Rates: Understand the difference between flat interest rates and effective interest rates (refer to our FAQ section)
Other Fees: Late payment fees, early repayment fees, and processing fees can massively increase your loan expenses in proportion to the amount you’ve borrowed.
Monthly Payments: You’ll want to have a loan amount that you can pay monthly without paralyzing your budget and essential expenditures. Don’t choose a large loan disbursement if you don’t have enough for your daily upkeep costs.
FAQs About Foreigners Loans
Here are some questions that most applicants ask before applying for a foreign loan.
What’s The Total Foreigner Loan Amount I Can Get?
Your total loan amount depends on the loan amount the bank approves. For example, Citibank approves loans based on your existing credit limit. Financial institutions often use various loan amount calculations that greatly factor in your risk of defaulting, employment duration, and regular monthly income.
Aren’t Moneylenders Former Loan Sharks?
Not at all.
Singapore’s licensed moneylenders are government-regulated financial institutions that are independent of banks. Each licensed money lender has undergone a series of tests that qualify them to run the business. In doing so, Singapore’s licensed lenders are different from organized crime-run loan sharks. Licensed moneylenders will face repercussions from the Registry of Moneylenders and the Ministry of Law for any unsavory activities.
How Do I Know If I’m Working With a Reliable Licensed Moneylender?
Singapore’s Registry of Moneylenders has the entire database of licensed moneylenders in Singapore. If you’re unsure about a promotion you’ve read or seen anywhere, consult this database.
The Registry and MinLaw restrict moneylenders from many unethical activities that loan sharks commit. These include the following:
- No unsolicited messaging of offers
- Customers must sign a waiver that verifies that they have fully understood the foreigner loan’s terms and conditions, as a licensed moneylender explained.
- No social media presence
- Physical publishing only in their respective physical branches/properties
If your prospective licensed moneylender commits any of these activities, report them to the Registry and don’t use their services.
Why Do Foreign Borrowers Have Higher Eligibility Requirements?
By definition, high-risk loan borrowers are often referred to as subprime borrowers. They have a higher risk of defaulting on the loan because they have poor credit or other factors that make them less likely to repay it on time.
In Singapore, foreign workers have no credit scores and any tangible property that banks can easily liquidate if the borrower can’t repay their loans on time. With this factored in, banks ensure they work with the lowest-risk foreigner profile that provides long-term employment in Singapore, have enough salary to handle high-interest rates and monthly repayments, and deal with any penalties.
What Happens If Foreign Borrowers Fail to Pay Their Financing?
Foreigner loans are unsecured financial products, which means your lender will move to court for a settlement that can lead to having your bank account in Singapore and any tangible property seized. Foreigners with no means to pay for the settled sum must provide any means necessary to repay their loans as the court mandates.
Foreigners cannot file for bankruptcy, but the banking industry and moneylenders may include the problematic foreign borrower in a service blacklist during the worst possible scenario.
Do All Banks Provide Foreigner Loans in Singapore?
Most banks provide loans for Singapore-based foreign workers. For example, HSBC Personal Line of Credit accepts foreign borrowers. However, it is the right of banks and other financial institutions to refuse or avoid foreign customers from using their services.
Do I Need an Excellent Credit Score to Use Foreigner Loans?
Foreign borrowers do not need a high credit score to use bank and licensed moneylender foreigner loans after they’ve passed the loan product’s eligibility and requirements. However, the unsecured loan’s nature safeguards the bank from any foreign borrower’s possible default. Licensed moneylender foreigner loans operate on the same principles as bank foreigner loans.
What’s the Difference Between a Flat and Effective Interest Rate?
A flat rate is a fixed amount that is paid on an outstanding balance at any given time. This means that more payments can be made towards the overall balance as there are fewer interest-bearing fees.
Effective interest rates refer to the amount of money that is gained from a loan. This means it is calculated by taking an interest rate and dividing it by the investment period.
Differentiating the two can help foreigners budget and manage their regular loan repayments effectively.
Why Am I Paying Early Repayment Fees for Paying Too Early?
Early repayment fees on personal loans are a common practice that benefits banks because it allows them to collect interest on the loan before it gets paid back. This provides banks with a guaranteed source of income and also makes sure that the bank doesn’t lose any money if you need to take more time repaying the debt.
What’s The Difference Between Administrative Fees and Processing Fees?
Administrative and processing fees are the same thing. They’re the amount charged by a lender to process a loan. The fee amount usually depends on the number of documents and processes needed to accomplish and complete the loan application.
The Final Word
- Foreigner loans are similar to personal loans, but any bank and the financial institution offers them to foreigners only.
- Loans for foreigners have higher eligibility requirements because of the natural high-risk profile of foreign borrowers.
- You can use licensed moneylenders as an effective alternative to any bank foreigner loan in Singapore
- Singapore has a wide variety of bank foreigner loans to choose from.
Raffles Credit is Singapore’s best personal loan provider that guarantees excellent customer services for Singaporeans, permanent residents, and foreign workers who need to borrow money with the most convenient terms. Head to our loan application page and get a free quote on the same day!