Getting a personal loan as an expat

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Published 2019-10-28 06:55

Banks sell loans, and regardless of whether you are an expat or national, they want you — the customer — to buy these loans. Bearing this in mind will help you understand that getting a loan as an expat is not out of the question, and it is worth considering if it will ease your life as an expat. But where do you start when applying for a loan in a country whose banking system is not overly familiar to you?

Maria Iotova

I'm a freelance journalist and editor for the travel, non-profit, and news sectors. After intensively exploring my home country of Greece and the UK as a journalism graduate, I have lived in Ghana, South Korea, Mauritius, and currently in Rwanda doing what I love the most: getting out of my comfort zone.

A personal loan can be a liberating solution if you want to refurbish your home, make a costly purchase, or even pay off your debts. There are other types of loans, such as business and study loans, or mortgage, but in this article, we will only discuss personal loans for expats. So, if you are an expat who has never thought that it is possible to get a loan from your host country, then this article is for you. 

What to know before applying for a loan

Regardless of whether you are an expat or a permanent resident no bank will give you a loan before enquiring about the purpose of the loan, the amount you want to borrow, and your monthly income and expenses. As an expat borrower, you should be aware that money you may have in or receive to banks in your home country will most likely not be considered by the bank-lender in your host country. 

Generally speaking, personal loans do not require collateral (i.e., property, vehicle, another type of possession), which serves as a safety net in case you start missing payments on your loan. Personal loans, as opposed to mortgages, are usually unsecured. However, if you are past due on your payments, there are still consequences such as additional fees, a lawsuit, and even a loan default, which means that your credit score will suffer severely for the years to come.  

Your attitude and behaviour matters

You might be thinking that this isn’t a job interview, and you are right. But it is undoubtedly one of these situations in life where you must sell yourself in a convincing manner to close the deal. The bank is interested in knowing that you are a responsible and trustworthy borrower. When you attend your interview with the banker, make sure you are fully aware of the culture and business etiquette of your host country to avoid accidentally offending your lender or being judged as rude or arrogant. Also, your attire and body language can reveal a lot about you, so keep it formal and confident. 

A good and more convenient practice is to apply for a loan to a bank that you have already been banking with, and where they welcome you as a reliable customer. Once you have decided that you want to apply for a loan, don’t just appear one day at the bank and request it. Instead, work for a few months on establishing a good banking relationship and creating a rapport with the staff and the manager. It is them who will decide on your loan after all.

Hear from the experts

We spoke to an Assistant Manager in a big bank in the UK, who prefers to stay anonymous, and here’s what they told us about getting a loan as an expat in the UK: “Loans aren’t usually granted for expats in most major UK banks because banks can’t verify the income of an overseas resident, and as all loans are unsecured they have no way of getting their money back if someone is unable to repay the loan back. On the other hand, mortgages and secured loans are granted to expats, but the process can be somewhat longer and more strenuous.”

In the past 25 years, Rwanda, this small country in east-central Africa, has shown firm economic growth and profound social development — making itself an attractive destination for expats and businesses. A banker in Rwanda, who also wishes not to reveal his identity or employer, explained that the country is keen on lending money to expats whether it is for personal use or to support their business endeavours. Precisely, “the requirements of getting an expat loan are almost similar to the requirements of getting a loan as a Rwandan national. However, expats must have a resident permit.” Of course, like all lenders, banks in Rwanda can deny giving a loan in cases of weak repayment capacity, unclear source of repayment, ambiguous borrowing purpose, and bad credit history. 

In any case, before attending a loan interview at your bank, we advise you to do the maths, be certain about proceeding further with such a commitment, and do a thorough research regarding rates and requirements.