If you’re a foreigner with pressing financial needs, there are various ways of getting local loans for expats in the Philippines. The process may not always be easy but possible if you have the necessary papers. No need for loan sharks charging exorbitant interests. There are legit lending establishments around ready to serve expats, like banks. So try Citibank, Standard Chartered or HSBC for starters.
BPI Family allows spouses of foreigners to make house loans, enabling expats to own a house and lot through their legal spouses. BDO allows loans for expats wanting to buy a condo unit.
A personal loan (sometimes also a non-collateral loan) is based on your credit history and the ability to pay your loan from your personal income. If you’re an expat employee, some companies may require that your work contract duration coincide with the maturity of your loan.
Expats can have tough times trying to borrow money from banks, although some expats attest how big banks lend to foreigners. You may have to prove a much prolonged stay in the country to get approval. However, in time, you may get better chances if the banks finally get familiar with your good repaying habits. If you’ve had personal loans before with international banks which have branches here, chances are they can make local loans for expats in the Philippines a bit easier, especially if you have a proven track record as a good payer.
Some private lenders also entertain foreign borrowers, but often with higher interest. And it is always safer to deal with banks especially with regards to getting fair interest rate and repayment processing.
Some expats are helped by the fact that they have Filipino spouses, but only if the spouse is locally employed. If so, then the spouse can act as co-borrower and make the loan application a bit easier. A willing close friend can also act as co-borrower.
Car and House Loans
You may avail of a personal loan for car or house. Car loans are easier to avail and the work contract requirement is often applicable here. Receiving monthly disbursements from the country of origin, like social security or retirement pension, and proof that it is being sent here via local bank regularly, is also verification of the ability to repay local loans for expats in the Philippines when availing car loans. Having a Filipino spouse as co-worker also applies here.
As for house loan, aliens are only allowed to own condo units. Buying land is definitely out of the question. Try to look for condo loan offers, or condo financing which is a popular offer today. Sometimes you can have better chances at this if you agree to a higher down payment than the minimum and, again, if you establish proof you’re a good payer. Good repaying reputation is priceless with local loans for expats in the Philippines.
Expats eyeing business loans should be ready to present proof of property ownership to serve as collateral. This means owning a condo unit or a vehicle. Thus, the strategy is to invest first on them.
What Banks Require
Most banks require the following on local loans for expats in the Philippines:
- The expat should have been a resident for at least two years.
- He or she must be of legal age with the capability to repay the loan.
- The minimum gross annual income (varies with different banks) should be satisfied.
- A residence or office working landline.
- A residence or office within the bank area.
- For expat employees: at least one year employment.
- For self-employed: sole proprietor or a major part-owner of the business. The business should have been operating for some two years in the country.
- Professionals: must have been in private practice for at least a year.
Some banks may have these additional requirements:
- Copy or certificate of employment or employment contract.
- Recommendation from the relevant embassy.
- Copy of valid passport and resident visa.
- Or, work permit with valid visa.
- Or, Resident Visa for resident investor and Visas Philippine Economic Authority.
- Or, Visa with Eo226.
- Or, ICR or ACR or ACR1.
Local Loan Sharks
Beware of local loan sharks who lend money at 20 percent a month. Locally, they are known as 5-6. The loan they offer is illegal. They are easy to come by in busy, crowded city streets. Definitely, they are unsuitable as local loans for expats in the Philippines.
Anyone can borrow money as long as he or she has a permanent address. No other requirements are needed and the deal can be done in a few minutes. If say, you borrow P5,000, you pay P6,000 after a month. Thus the term 5-6.
Saving money is still the best option for funding even for expats. Borrowing money should be a last option especially when a sudden emergency needs immediate financial attention.