Today, there are over 8 million Americans living outside of the country. The quality of life, cost of living, and other things may make other countries more appealing. Or maybe they’ve had to move for work, school, or love.
Whatever the reason for packing up and calling another country home, you may not always have the full funds to support your family. This is especially true if you want to hit a milestone, such as buying a car or purchasing a fridge for your home.
Luckily, you can apply for a loan to get the financial boost you need. Here’s some important information you need to know first.
Check if You’re Eligible
Whether you’re in England or Singapore, lenders will always have requirements for loan eligibility. And as an international borrower, it’s very likely that you’ll have to do extra.
If you apply for a personal loan for foreigners in Singapore, for example, then you’ll need to meet requirements that are more than those of the locals. This is to lessen any risks, as expats can easily leave the country and go back home to avoid paying back their debts.
Typically, foreigners will need to have a higher minimum income. You might also need to meet a higher threshold, and hold a valid visa or residence permit. It’s common for lenders to require that you have a bank account in the country too.
If you’re seeking a loan from a country outside of the one you live in, do note that they might not be able to help you. Some banks don’t serve specific countries.
Look at Your Credit Score
The US and many other countries have credit score systems. It’s based on your history and how punctual you are with paying things off. It’s a great way for lenders to tell if a person will be responsible, so don’t be surprised if they ask for your credit score.
It’s possible to get a loan with a poor credit score. However, the interest rate will be high, and you won’t be able to borrow much. So it’s best if you raise your score first before applying for a loan.
If you keep getting shot down, then there are some alternatives to consider. For example, there’s peer-to-peer lending and crowdfunding.
Plus, you can try secured loans. You’ll need to put something down as collateral (such as your car or home), and it’s easier to qualify for. But be aware that if you can’t keep up with payments, the lender will take your collateral.
Check the Limitations and Restrictions
Earlier, we mentioned that some institutions might require you to have a valid visa or residency permit. You’ll also need to have a good credit score and meet the minimum income requirements.
In addition, you might run into language barriers. In that case, you’ll want to find a bank that deals with expats so you can comfortably communicate and get translation services.
If you’re borrowing from an American bank, they might require that you have an American account, that you work for a US employer, or have a US address. You might be able to get around this by having a cosigner or joint applicant.
Compare Interest Rates and Fees
Comparing interest rates and fees is something you need to do, regardless of where you’re located. Obviously, higher interest rates will add up over time, so it’s best to go for the lowest possible.
Institutions will also charge fees for things like:
- Application
- Prepayment
- Origination
Make sure you read the terms and conditions carefully to understand what you’re getting into. You might be able to negotiate fee waivers, so it doesn’t hurt to try.
Understand the Repayment Terms
Before you sign anything, understand the repayment terms first. These involve the duration of your loan, as well as monthly payment amounts and late payment fees.
It may be surprising, but some institutions will penalize you for paying early. So double-check if there are early repayment fees. This can affect how you plan your repayments.
Ensure you can make them on a long-term basis before applying. Otherwise, not only will you pay late fees, but your credit score will take a hit too.
Keep the Exchange Rate in Mind
Chances are, you’ll be dealing with the US dollar and the local currency. The exchange rate will constantly fluctuate, which will impact the total cost of your loan. Plus, the bank will likely charge fees for currency conversions.
It’s vital that you monitor the exchange rates. Try to save up money and make larger payments when the conversions work in your favor.
If you don’t want to deal with this hassle, then try to take out a loan in the local currency. Repaying will be more straightforward since you don’t have to swap currencies or pay extra fees.
Have Your Documentation Ready
Whichever country you’re in, you’ll always need proper documentation to get approval. Otherwise, how is the institution supposed to confirm your identity and other important details?
It’s best if you gather all your documents before applying; it’ll make the process much smoother and faster.
Some common things you’ll need include:
- Government-issued ID
- Utility bills
- Bank statements
- Tax returns
- Credit report
If you’re signing up for a secured loan, then you’ll need proof that you own the collateral. You’ll also need proof of its value.
The exact papers you’ll need will depend on what type you’re applying for, your circumstances, and the lender itself. It’s a good idea to read up on their site and then contact them if you need any clarification.
Secure a Loan if You Live Overseas
Being an expat comes with its own set of challenges. Having some extra money to work with can be a godsend in that case, and that’s what you can do with a loan.
However, there are more hoops to jump through as an expat, so it’s best if you know about them beforehand. That way, when the time comes, the process will be smooth, from the application to the disbursements and payments.
