Not from South Africa? Don’t fret, where there’s a will, there’s a way, and if you continue reading, we’ll show it to you!
Foreigners seeking loans in South Africa know all about the aches and pains of trying to successfully apply for a loan without a South African Identity in the form of a little green book that all South African’s possess.
You might take for granted that after many years of residing in the beautiful country of South Africa, with an official work permit, that you may actually be entitled to taking out a loan should the need present itself in your daily life. Well, you know what they say are the only two things you can take for granted in life, and that’s death and taxes. Unfortunately, even qualified people living in the country with a work permit are struggling to get this huge burden alleviated.
You’re probably wondering why this is such a tedious task and what the hurdles truly are. At the end of the day, you’re living in the country, paying your taxes just as all the other citizens are, however, it’s found that one of the major hurdles is due to the fact that there is no existing credit record for you. We all know just how important the credit score for any individual is in order to qualify for loan approval, so then why would this supreme factor be negated due to the individual being an immigrant from a foreign country? Well, it doesn’t and that’s wherein the problem lies.
Lending companies are at risk with every loan they make, and that is why people who aren’t permanent citizens of the country will always have a difficult time because they just don’t have any proof of lending history. That said, there are certain banking institutions that do consider applications from foreigners, provided they have a solid employment contract and confirmation of employment at the company at the time of the loan application.
Remember, just because someone is permitted to apply under a certain set of prerequisites, does not guarantee him the approval of the loan. As we know, there is a multitude of contributing factors to this decision, as with any loan and any borrower.
So, now that we have established the problem, we can go about working the solution!
How foreigners can go about attaining a good credit record in South Africa
If you’re new, the first thing you should do is get an account in the country with a bank of choice and ask for advice on which give you the best rates and have the best customer service etc. Once you have completed that initial task, the rest is quite simple in that you need to apply for a credit card, open a clothing account, take out a mortgage, purchase a car, whatever you might need now that you are living in a foreign country, chances are one of those avenues is going to involve credit in some way or form.
Next step is to just go about your days and months, ensuring that you meet your full repayment amount month to month, never late, never short, just in time and in full until such time that you have been deemed a good payer. The longer you have this account, the more likely you are to get a decent amount approved for a loan application. Bear in mind that this loan would need to be settled before you left the country if it is your intention to do so. If you feel for any reason that you will not make the repayments in time before you’re flight is ready to take off, or your ship is ready to sail, then please think it through before spending all your time going through the motions of applying, only to be told that you will not qualify based on time constraints vs affordability.
Any credit awarded to any foreigners is governed by SARB’s (South African Reserve Bank) exchange-control policy, and this policy clearly states that if you possess a valid working permit in the country, you are within your right to apply for a personal loan. So even though it is known as an extremely painful process, it’s certainly not an impossible one.
When it comes to the policies from various banking institutions in South Africa, they vary slightly, and it pays to know the differences between them all because some might not suit your current situation. Let’s have a look at what our banks have to say with regards to foreigners applying for a loan in an instance where there is no valid ID document for the individual applying:
Standard Bank: He would need to have an existing account with us, and then we will lend money to the individual, provided he has a valid working permit with proof of contract at the employer and settles the loan before his last day in the country.
Nedbank replies: We follow the rules of the SARB exchange policy and provided the borrower repays the loan in full before leaving the country and has an existing work permit issued by the dept. of Home Affairs, then we will lend him the money as per his right to.
FNB replies: We will not lend money to any individuals not in possession of a South African ID number.
As you can see, everyone is different and there’s no reason for them to comply with anything should they choose not to. But a good idea would be to steer clear from FNB on this one! For all other banks, ensure you follow the simple steps and go into this with a clear plan on how you’ll repay the loan before you’re set to leave and head back home!