Foreign nationals vs. Loans

By Danielle van Wyk

It’s true, foreign nationals often struggle when living in a foreign country. From language barriers and battling unemployment, to xenophobia and struggling with financial support services.

With this, there are many misconceptions about what foreigners are eligible for, and loans are one such thing.

This week Justmoney decided to find out whether a foreign national can take out a loan in South Africa, and how they would go about doing this.

The answer in short is yes they can.

It is important to note that financial institutions must treat temporary residents of South Africa in the same fashion as they would any other customer.

Gerret Oosthuizen, head of Physical Channels Enablement, RBB SA, and Absa Group, says: “Knowing our customers and understanding their risk profile, regardless of nationality, is an essential aspect of our business.”

According to the South African Reserve Bank (SARB) any foreign national is eligible for a range of banking products granted they complete a Foreign National Declaration as prescribed by SARB’s rules and regulations.

According to First National Bank (FNB) the following criteria is also essential:

  • You must be between the ages of 18 and 64
  • Be a permanent SA resident and own a 13-digit ID or be able to produce a valid passport
  • Have a valid residency permit
  • Have a valid work permit
  • Have proof of residence
  • Be permanently employed or self-employed
  • Your salary must be paid directly into your bank account

Consideration is also given as to the customer’s creditworthiness and overall risk profile. Here, according to Oosthuizen, several factors come into play regarding the level of borrowing risk that the bank carries. These include:

  • Credit history to determine customer creditworthiness. This is a requirement for all customers, including South African citizens.
  • For a foreign national, the term of residence in South Africa often has an impact on the repayment period being compressed and affecting the ability of a customer to afford repayment amounts or the requirement to present higher deposits. This is industry-wide and is not limited to Absa.
  • Financial institutions must work with the risk of foreign nationals not being guaranteed the renewal of their residency permits, which potentially impacts the ability of the consumer to retain employment and service their debt.
  • Regulatory requirements (e.g. SARB approval, FICA, Exchange Control Requirements, Anti-money Laundering, Proof of Source of Funds)

While the above outlines the broader qualifying criteria for loan qualification, there are more specific requirements depending on the type of loan you are after.

Here, according to Oosthuizen, is a breakdown:

Home Loans

For a home loan, the following supporting documents are required:

  • Passport
  • Employment contract
  • Work permit
  • A fully completed and signed copy of your Offer to Purchase (i.e. a document of intent to purchase a property)
  • Proof of Income (3 months for full-time employment or 6 months if it includes overtime/commission)

Vehicle Finance

The term of financing should not exceed the period of the work permit (e.g. if a client’s work permit expires in 3 years, they can only be financed up to 3 years). The following supporting documents are required:

  • Passport
  • Employment contract
  • Work permit
  • Offer to Purchase
  • Proof of Income

Credit cards

The following supporting documents are required:

  • Passport
  • Work permit with minimum of 6 months
  • Proof of address
  • Proof of Income (3 months)

Personal Loans

The following supporting documents are required:

  • Passport
  • Work permit
  • Proof of address
  • Proof of Income

It is important to remember that each financial institution and loan provider have their own requirements and stipulated processes. Applicants are encouraged to do their research and contact their desired institution or provider for any further information.

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