Foreigner loan 101: Everything you need to know before applying for one in Singapore

January 6, 2022
5 min read

Applying for a foreigner loan in SingaporeMoving to a new country can be daunting. The distance from family and friends, contending with unfamiliar ways of doing things and a general sense of isolation can be very stressful. Add financial problems to the mix and it is easy to feel overwhelmed. If you are an expatriate working in Singapore and in need of extra cash, a foreigner loan may be the best solution.

Can foreigners apply for personal loans in Singapore?

A personal loan for foreigners is not as easy to obtain as a regular loan. The income criteria are stricter, particularly for those in the low-income bracket. For those on dependent visas, the restriction on casual work limits the avenues of additional income as well so that’s when a loan might be helpful if you are in need of cash.

If you are struggling with this, one way for you to better qualify for a foreigner loan in Singapore would be to find a guarantor with a good credit history. (This, however, might be tough for those who don’t have a strong social and familial network here.)

Note that most banks will only accept an application for a cash loan for foreigners in Singapore if you are 21 years of age or older.

What are the eligibility criteria for personal loans for foreigners in Singapore?

Applicants have to satisfy several criteria before they are approved for a foreigner loan in Singapore.

Residency

To be eligible for a foreigner loan, you need to be residing in Singapore. This applies to loans from both banks and licensed money lenders.

Employment criteria

Licensed money lenders generally do not place restrictions on employment when it comes to personal loans for foreigners. Anyone who is legally employed and can produce the relevant employment and income documents is eligible to apply.

By contrast, banks in Singapore will only lend to foreigners who are professionals.

Employment requirements vary between loan providers. Generally, Work Pass holders need to be able to show at least 3 months of employment to qualify. Additionally, there should be at least 3 months (or 6 months for certain lenders) remaining on their contract or work permit from the day of the loan application. Because the exact criteria vary between institutions, speak to each to familiarise yourself with their conditions.

Loan limits

The limits for a cash loan for foreigners in Singapore set by the government are summarised in the table below.

Borrower’s annual income For loans with licensed money lenders For bank loans
Less than $10,000 $500 Not eligible
At least $10,000

and less than $20,000

$3,000
$20,000 to $40,000 Up to 6 times monthly income
Above $40,000 ($60,000 for some banks) Up to 10 times monthly income

However, licensed money lenders in Singapore are private businesses and are free to set more stringent criteria. Many of them might only approve a foreigner loan if the applicant earns over $20,000 per year.

Why is the criteria for foreigner loans stricter?

The tighter restrictions for a foreigner loan in Singapore protect the lenders from bad debts.

This is because a foreigner has less reason to stay in Singapore compared to locals. If they incur very large debts, they may be tempted to leave and abandon their repayment obligations. This is especially the case with low-income foreign workers; lenders are generally more lenient towards high-income borrowers who may have higher income capabilities to repay their loans.

Another reason is that foreigners have a limited (or no) credit history in Singapore. The lack of supporting credit information automatically disqualifies them from some loans and lenders.

Where to apply for personal loans in Singapore for foreigners?

Foreigners in Singapore have two main choices for personal loans, namely banks and licensed money lenders.

All major local banks will extend a cash loan for foreigners in Singapore if they satisfy certain criteria. The five biggest banks are:

  1. Citibank
  2. DBS/POSB
  3. HSBC
  4. OCBC
  5. Standard Chartered

You can also apply for a personal loan with licensed money lenders. Here’s a list of all the legal money lenders in Singapore.

Foreigner loans with banks vs licensed money lenders: What are the terms?

Loan terms with banks and licensed money lenders can be summarised generally as follows:

Banks Licensed Money Lenders
Interest Rate 3.5-11% per annum 1-4% per month (up to 48% per annum)
Loan Tenure 1, 3, 6, 9 or 12 months Up to 12 months
Installments Usually monthly only Weekly, fortnightly or monthly

(For payday loans, the entire loan is repaid either the next month or on the borrower’s next payday.)

Processing Fees >1%, minimum limits may apply Up to 10% of loan amount
Late Payment Fees At least $80 Up to $60 late payment fees and up to 4% late interest for each month of late repayment
Pre-Payment Fees 2-3% Nil

Debt consolidation loan in Singapore for foreigners (with licensed money lenders)

If you are struggling under the weight of several loans and debts, a debt consolidation loan may be the answer. This is a special loan that combines all your loans from all your existing creditors into one single loan with a single lender. This lender will pay off your various existing loans so you only need to pay off a single set of loan, usually at a lower interest rate.

Comparing the best rates and offers from different licensed lenders? Use LoanHere to help you compare different quotes so you can find the best deal for a foreigner loan in Singapore.

What are the documents you need?

You will need several documents to apply for a personal loan for foreigners in Singapore.

  • Proof of identity – FIN card, passport and work pass (valid for a minimum of 6 months from application)
  • Proof of address – Latest bank statement, utility bill or telephone bill
  • Proof of income (salaried) – Bank statements and CPF statements with at least the previous 3 months of contributions, income tax assessment and/or payslips for at least the previous 3 months
  • Proof of earning (self-employed) – Bank statements, CPF statements, income tax assessment and/or payslips for at least the previous 12 months

Note that lenders do not inform employers when an employee takes a loan. You may apply for a loan without worrying if it might affect your job.

How can you apply for the best foreigner loan in Singapore?

The loan procedure for foreigners is similar to that for locals. You can either apply in person at the bank or licensed lender’s office, or make an online application on the respective websites. Once you have submitted your online application, the financial institution will contact you.

They will then need to verify all your relevant documents before approving your loan. It may take up to 2 weeks with a bank loan and as fast as one day with a licensed money lender. If you need an urgent loan, a licensed lender is clearly the better option.

Once your loan is approved, the lender will draw up the loan contract. Always read through the terms of the contract and pay particular attention to the interest rates, instalment due dates, repayment period and fees. If you do not understand, always clarify before signing.

When the loan contract is signed, the money will be disbursed immediately. Banks will do this via a bank transfer or cheque while money lenders may do it via bank transfer or in cash.

Loan repayments for banks may be made using cheques or bank transfers. Money lenders accept cash, cheques or bank transfers.

Do you need a foreigner loan from a licensed money lender in Singapore?

LoanHere helps you find and compare the best rates with the top money lenders. Get your quotes from different lenders now!