Foreigners usually face a high-interest rate when they want to borrow money from the banks. Even if they have a valid bank account, the rate of interest is so high that it may look impossible for them to meet the repayment amount. But there are ways to get an affordable rate of interest that will suit your requirements.
Foreigner loans in Singapore are provided to individuals coming from different countries to settle in Singapore. There can be many instances where foreigners would require money for any kind of personal usage or for housing, medicine, education, etc. There are many loan products catered to foreigners in Singapore. As a foreigner, you will not need to worry about getting into debt with the many loan options available.
Getting a loan as a foreigner in Singapore
Getting a loan as a foreigner might mean that you will have to satisfy higher eligibility for the loan as compared to a Singaporean. The bank might hesitate to give foreigners a loan because there is always a little chance of the foreigners leaving and going back to their country. In such cases, the bank will be the one in the loss. Also, in the case of foreigners, there is a greater risk of them losing their job and being unable to pay too. Foreigners also have a higher chance of being bankrupt, as they might not have much savings or properties.
What interest can I expect on my foreigner loan in Singapore
As a foreigner, it is natural to expect that you will be provided a higher Interest rate as compared to Singaporean nationals. The Interest rate on your loan also depends on a lot more factors of the application. The Interest rate on your foreigner loan can range from 4% to 10% or more. We’ll see how different factors can impact the rate of interest applicable to your foreigner loan.
Banks vs. Private lenders
Foreigner loans are available with both banks and private based lenders. The eligibility criteria will differ greatly between banks and private lenders. Banks ask for a lot of documents and permits to approve your foreigner loan. While banks do offer higher security and provisions for the loan, they also have much higher levels of scrutiny. For this reason, the rate of interest offered by banks for foreigner loans is quite high and might start from 10.0%.
Private lenders such as https://www.gmcreditz.com.sg generally, ask for lesser documentation and requirements from the foreigner for approval of the loan. However, private lenders might also have other terms conditions attached to the loan that you will have research carefully before you submit your application. Private lenders also offer very low-Interest rates as compared to banks. Private lenders can offer foreigner loans for as little as 4%.
Private lenders are generally preferred by foreigners who were unable to avail of the loan through banks. The lower rate of interest can provide further impetus. However, make sure that you stay away from unlicensed lenders as you might get caught in a scam.
Effects of credit score on Interest rate
Your credit score is a big determining factor for your Interest rates. A credit score can determine your capability of paying off the loan. Naturally, a higher credit score will mean higher eligibility and a great chance of approval along with a lower Interest rate. The lower your credit score, the higher your rate of interest. Your credit and financial history are also checked while calculating your Interest rate. Any delayed payments will negatively impact your foreigner loan Interest rate. Delayed payments mean a higher Interest charged to your loan.
Unsecured loans and Interest rate
Quite naturally, foreigners don’t have any assets or property in Singapore. Providing a foreigner loan with no mortgage or security can be a risk factor for banks. Hence, banks will charge a higher Interest rate if you’re applying for an Unsecured foreigner loan. Private lenders will also charge lower Interest rates only if you can provide some form of security for the loan. Unsecured loans will have a higher Interest rate as compared to secured loans.
The high loan amount and Interest rate
A high loan amount can mean a higher risk factor. A high loan amount will ask for higher requirements and, often, a longer time of repayment. The longer you take to repay, the higher your Interest rate will be. A high loan amount, coupled with a long tenure, will have a very high-Interest rate applicable. Make sure that you only apply for the loan amount that you need and try to reduce the tenure as much as you can.
Effect of employment history on Interest rate
The bank considers foreign loans high risk because of the chances of foreigners losing their job and going away to their homeland. Strong employment history can help provide the bank or lender with the reassurance that your job will be stable, and you will be able to pay off the longer loan term. Your employment type will also be considered while determining the Interest rate for your Personal loan. Strong and long employment history with a reputed company will prove beneficial for your Interest rate.
Type of Loan and Interest rate
Different loan types can have different Interest rates. Personal loans can often have a higher rate of interest applicable as compared to housing or education loans. It is wise to do proper research and figure out if there are specialized loan products and packages with lower Interest rates that can satisfy your requirement.
As you saw, there are many factors that will determine the Interest rate that will be applicable to your foreigner loan. That is why it is important to thoroughly research before you apply for one. Make sure that you consider all factors and calculate your credit score and credibility accurately to avail as low an Interest rate as possible.
The final deciding factor lies with the bank or the financial body, but you can still approach different vendors or banks to determine if you can get a lower Interest rate elsewhere. Try to determine if there are any incentives for the kind of foreigner loan that you wish to apply for.
For getting a better rate of interest for foreigner loan in Singapore, you need to check the different types of loans available at different banks and money granting companies. You can always use the online application to get your loan application approved. While doing so, you need to make sure that you fill the right type of documents correctly. These days, there are many online financial lenders who can help you get the best rates for the foreign loan.