Living or studying in a foreign country can get expensive. A personal loan can help you with the costs, but finding an institution willing to lend money to temporary residents or non-residents can be a struggle.
The good news is that even if you are not a permanent resident or Australian citizen, there are lenders who will consider your application. It just might require a little more paperwork and patience. Here’s how it works.
Special considerations
When you are a temporary resident, the main struggle is finding a bank that lends to temporary residents. Most banks and non-bank lenders only process and approve applications made by Australian citizens and permanent residents.
Those banks that do accept temporary residents typically charge a higher interest rate on temporary resident personal loans because of the perceived risk profile.
Temporary residents can get loan terms between one and seven years, but most lenders will consider the length of your visa before approving a term.
Your residence status may also affect the amount you can borrow. Just like citizens and permanent residents, temporary residents have to meet eligibility criteria that typically includes proof of stable employment and income, having a valid visa, and being able to pay their debt in full before the visa expires.
Who can apply?
Temporary resident and non-resident personal loans are offered by traditional banks, credit unions, digital lenders, and other lending institutions. Most temporary resident visa holders can apply for a personal loan if they meet eligibility criteria:
- Minimum age requirements. These are often the same as the age requirements for permanent residents and Australian citizens. Typically you’ll need to be at least 18 years of age, but some banks require borrowers to be at least 21 years of age.
- Minimum income. Most lenders will only approve applications from employed temporary migrants. The only exception is made for international students applying for a student loan with an Australian bank or credit union.
- Credit score. Although Australian lenders will not be able to check your credit history in another country, they may still check if you have any credit history in Australia. Contrary to what you may think, a temporary resident can establish a credit history, for example, because of an arranged overdraft with an Australian bank account or with a credit card.
- The holding of an Australian bank account. Most lenders will only approve a temporary resident application if they have an Australian bank account.
- The type of visa. Those who have long-term working visas are more likely to be approved for a personal loan despite their temporary resident status.
How to apply
Applying for a personal loan is generally easy. Most lenders accept and process applications online. You will still have to provide some documents, such as:
- Proof of address. Utility bills in your name, bank statements, rental agreement, etc.
- Proof of income. Recent payslips from your employer or bank statements.
- Valid visa.
- Australian bank account.
- Proof of cash savings.
Pros & cons
Pros
- Quick access to funds. Most Australian lenders approve applications within hours. It’s not uncommon for funds to be transferred into your bank account on the same day as approval.
- The possibility of building your credit score. If you’re considering applying to become a permanent resident, a personal loan for temporary residents can give you the chance to build a credit history.
- Repayment flexibility. Most lenders allow you to choose between weekly, fortnightly, and monthly repayments.
- No early payment and exit fees. Many lenders allow borrowers to pay off the loan early without charging early payment or exit fees.
- Redraw facilities. Some lenders offer redraw facilities for their loans, which means that you’ll be able to borrow money again after you’ve made the payments. Typically available on variable rate loans only.
Cons
- Fewer options. Not every bank accepts applications from temporary residents, reducing your choice.
- Higher interest rates. Lenders in Australia are moving towards risk-based pricing, which means they use your credit score to calculate interest rates. Unless you’ve managed to establish a good credit score, it’s quite likely you will be considered a higher risk and be offered a higher interest rate than a permanent resident or citizen with the same score. Note that Australian banks can’t access credit scores in foreign countries.
- Higher minimum eligibility criteria. Lenders often ask temporary residents to provide more documents, including visa details and details about their profession. Your personal loan term must also end before the expiry of your visa.
