Personal Loans for Non-Citizens & Nonresidents in the USA

Guest Post by Rohit Mittal

Moving to a new country is a challenge in and of itself and usually means you will incur quite the cost as you establish your life in a foreign land. Just buying flights for the whole family and moving your life over to the United States might leave a dent in your savings account, or even worse, cause you to start creating a pile of debt for yourself that feels impossible to get out of.

So what should you do in this case? How can you get a loan in a new country to pay for the things necessary to start a new life abroad?

We can tell you for a fact that it is possible for you, a nonresident, to take out a loan in the U.S. Although it might be more difficult to get a loan as a nonresident, it isn’t impossible. As a nonresident, you are able to apply for a loan for personal use, for business use, to buy a home, and to pay for college.

We’ve created this ultimate guide to getting a loan in the United States as a nonresident to help you live out your dreams without destroying your savings or creating an immovable mountain of debt. Continue reading to find out how you can get a loan in the United States as a nonresident!

Can non-U.S. Citizens Get Personal Loans?

Many banks and lenders will not issue a loan to non-citizens without a cosigner, but it is still possible. There are exceptions, such as Stilt, which enable U.S. immigrants to get a loan even if they have no credit history or Social Security number.

Other Factors That Impact Loan Eligibility

A difference in credit card interest rates is sometimes normal between residents and nonresidents, but that depends on the lending institution. Sometimes nonresidents are charged higher interest rates compared to U.S. residents.

Unfortunately, there may be some restrictions on getting loans for immigrants if the immigrant has only been in the United States for a limited amount of time. In cases like this, the loan might not get approved since institutions are scared that the person might leave the country without paying.

Furthermore, it is harder to get a loan if you have diplomatic immunity, because this means even though you live in the U.S., you may not be subject to U.S. law and therefore render institutions liable if you decide not to pay back the loan.

You might be eligible to apply for certain kinds of loans but might not have luck in applying for a personal loan in the United States since they are usually not designed for nonresidents. Although it can be more challenging, the good news is that immigrants can still apply for mortgage loans and auto loans with bad (or no) credit history. Our tip is to be patient with these kinds of loans since they call for an exorbitant amount of paperwork to get through.

So, how do you get a loan when you don’t fall into the above-mentioned categories?

How Can I Get a Personal Loan Without a U.S. Credit History?

Depending on the lender, there might be other options for you to get a loan! Some of these options include:

Assembling a credit report with three nontraditional credit accounts: a rental, utility, or life insurance bill, for example.
Obtaining your credit history from a foreign independent credit reporting agency.
Getting written verification from foreign creditors to establish a credit history.

If you choose the route of verifying your credit history from another country, you will need to get all your paperwork together beforehand and convert your existing credit into U.S. credit to apply for a loan. It is crucial that you have all of that ready before moving to the United States.

How Can I Get Other Credit References?

Apart from having a credit history from your home country, you can get nontraditional credit references within the United States. This type of credit will be additional help for you when trying to obtain a loan within the United States.

Examples of nontraditional references include your rental history, and any history of payments, such as utility bills (gas, electric, water, and cable TV). In addition, you can use non-payroll-deducted medical, life, auto, or renters’ insurance or school tuition.

The most important thing is showing at least three nontraditional credit references, with each verifying at least 12 months of on-time payments.

Can I Get a Personal Loan as a Nonresident?

When applying for a loan as a nonresident, be patient—expect a mountain of paperwork to come your way.

Depending on the loan, you will need to provide different kinds of paperwork as well.

It is also important to note that loans are only granted to nonresidents that plan to stay and work in the United States for at least three more years after taking on the loan. If you plan to stay less time, you likely won’t be able to apply for a loan.

Documents Required to Apply for a Traditional Personal Loan as a Nonresident

Valid visa
Employment authorization form
The form that declares you as authorized to work within the U.S.

Different Types of Personal Loans for Nonresidents in the U.S.

There are three main types of personal loans you can apply for as a nonresident, and this is true whether you’re an L-1 visa holder, on your OPT as an F-1 visa holder, or simply have a bad credit history.

1. Short-Term Loans

For a short-term loan, the repayment time is usually between three to five years. Short-term loans are used for smaller sums of money, and can also be used for a specific purpose, such as auto title loans. The minimum sum is usually $1,000, and the maximum is $2,250.

2. Installment Loans

Installment loans have to be paid back over a scheduled period of time with a set number of payments. This means they can last a few months or several months. It can be a good loan to obtain when you want to improve your credit history. The maximum you can take out for these kinds of loans is usually $5,000.

3. Unsecured & Secured Loans

Unsecured loans are loans that are not backed by any of your property, meaning you have fixed terms and usually high-interest rates on repayment. This kind of loan is typically used to consolidate debt or to make home improvements. The maximum amount of this loan is $100,000.

In addition to unsecured loans, there are secured loans. Secured loans require an asset as a guarantee, such as a house or a car, in order to receive the loan. This provides the lender with protection so that if you are unable to repay the loan, they have the right to access your guarantee and sell it. Please note these loans can be more risky, and the pros and cons should be seriously considered, since you could be giving away your right to your home or car.

Student Loans for Nonresidents

How Can I Get a Student Loan as a Nonresident?

Every year, hundreds of thousands of students dream of studying in the United States—in such places as the prestigious and renowned Ivy League schools. However, many choose not to go because they start to panic when thinking about the high cost of tuition fees and living in the U.S.

We advise you not to give up on your dream just yet because there are options that can help you afford an education in the U.S. Nonresident students in the U.S. are eligible to apply for student loans (and yes, there are personal loans for F-1 visa holders as well!). This is usually because lenders know you are young and probably haven’t built up your credit history yet. Therefore, you don’t need to show your credit history, but you likely do need to have a cosigner to legally sign the loan papers for you.

Requirements to Be a Cosigner for a Student Loan in the U.S.

In order to be a cosigner, the following requirements have to be met:

Proof of U.S. citizenship or lawful permanent residency
Good credit history
Income history
Proof of having lived in the U.S. for at least 2 years

Mortgages for Nonresidents with SSNs

How Can I Finance a New Home in the United States as a Non-Resident?

The most important thing for many people coming to live in the US is to own their own home in the country. Most U.S. immigrants come to the country to live the American dream, and a part of that dream is often to purchase a house or an apartment and to provide shelter for their family. Although it is very difficult for a nonresident to finance a home loan or a mortgage, it is not impossible.

Whether or not you are able to apply for a loan to pay for your house depends solely on your residency status. You are allowed to apply for a home loan as a permanent resident with a valid green card (Form I-551) and as a nonpermanent resident with a valid work visa.

How Can I Apply for a Mortgage as a Non-Resident?

Apart from being a permanent resident with a valid green card or a nonpermanent resident with a valid work visa, you need to provide documentation in order to be able to apply for a mortgage loan.

Documentation Necessary to Apply for a Mortgage as a Non-Resident

A valid work visa—E1, E2, H1B, H2A, H2B, H3, L1, or G1–G4 visas, if applicable
A valid Social Security number
Employment authorization documentation
Proof of employment history
A credit history
Proof of income

This documentation is needed in order to show the lender you are able to repay the loan you are requesting.

3 Ways to Get Loans Without an SSN

Securing a loan without a Social Security Number (SSN) is tough. Most banks prefer providing loans to U.S. citizens over the non-U.S. residents, no matter how high their credit score is.

Starting your own business, buying a home, owning a car, or fueling similar expenses is difficult without a loan, and obtaining a loan is difficult without an SSN.

But do not give up yet. Here are three ways you will be able to get a loan without an SSN.

Get a Cosigner

Various loan providers allow you to add a cosigner to your application if you don’t have an SSN. The cosigner acts as a guarantor for the debt and ensures that the money borrowed will be returned with all the levied interest payments. This reduces the risk that a loan provider must handle the missing payments themselves.

A cosigner may be your friend or a relative—who ideally has a good credit history and must be able to cover the payments in case of any unforeseen events.

Find Lenders Who Will Accept an ITIN Number

The majority of loan providers ask for an SSN; however, there are various reputed financial institutions including banks that are willing to accept alternative means of identification. One such common type of identification is an ITIN Number which is also known as an Individual Taxpayer Identification Number. This number is issued by the IRS to resident and non-resident immigrants.

This number assures the lender that the borrower is a taxpayer and is capable of returning the borrowed amount.

Learn more about applying for an ITIN here.

Borrowing From Lenders Designed for Immigrants

As the rate of immigration grows at a rapid pace, various companies have emerged in the market which are tailored especially for immigrants. These companies do not ask for a high credit score, and might not even require a cosigner. This increases your chances of securing a loan even when you don’t have an SSN.

Personal Loans With an ITIN Number

Thankfully, immigrants living in the U.S. without an SSN no longer need to restrict themselves to using banking and financial services. The changing laws have made it easier for them to open bank accounts, build their credit score, and secure loans. This is all thanks to an ITIN.

According to U.S. laws, immigrants, non-resident aliens, their spouses, and other dependents can apply for an ITIN as soon as they are eligible to pay federal taxes.

If you are a non-resident living in the U.S. and do not have an SSN or ITIN, it is highly recommended to get the ITN as soon as possible. When compared to the SSN, it is quite simple to apply for an ITIN. Obtaining an ITIN can help you in an array of ways—build your credit score, pay taxes, get a U.S. driver’s license, secure a loan, and so on.

Here is how you can get an ITIN number:

Fill out an application to get an ITIN, which is basically the Form W7.
Provide all the relevant documents like a driver’s license, school records, medical records, and other documents supported by the IRS along with the application.
Don’t forget to include your tax return so that both of these documents can be processed at the same time.
Send all these documents to an IRS office.
You will have your ITIN within four to six weeks.

Learn more about applying for an ITIN here.

Personal Loan Interest Rates in the U.S.

Average personal loan interest rates in the U.S. have been between 10.30% and 32.00% in 2021. Your rates will depend on your credit score, the duration of the loan, the amount you want to borrow, and the policies of the lender.

Although you can find competitive rates from credit unions and banks, there are various online lenders that offer the lowest rates, especially to creditworthy borrowers. What’s more, not only can online lenders offer the best rates, they can also provide you with a loan even when your credit score is low, even as low as 580.

Talking about the average personal loan interest rates by lenders, the interest rates offered by Avant in 2021 was 9.95% – 35.99%. LendingClub was another lender whose interest rates varied greatly — between 8.05% and 35.89%. OneMain Financial was a bit on the higher side, somewhere in the range of 18.00% – 35.99%.

All these rates are a bit on the higher side which might leave you wondering what is considered a good interest rate on a personal loan? Well, there is no one-fit answer to this question.

Personal loan interest rates vary depending on a range of factors like the intended use of the loan, its terms, and the balance. Generally, the eligibility criteria set by lenders for securing the best rates are tough and it might be tough to qualify for them. On average, you should aim for an interest rate between 10.30% and 32.00%, or better, in 2022

The best practice here is to try your luck with multiple lenders and compare the rates offered by them along with other benefits. If the proposed interest rate still seems too high, you can explore alternate options, or work on the major factors that impact the rate like employment status, credit score, credit history, debt-to-income ratio, and so on.

General Loan Information

Which Loan Payment Option Should You Choose?

Depending on the loan, different payment options are available to pay back the loan. Apart from the payment options, you also have to take into consideration the interest rates and the fees associated with loans.

Make sure to evaluate everything and to read all of the contracts carefully before you actually decide to obtain the loan. Also, make sure to shop around for different lenders and not take the first offer! Sometimes you’ll find there are better offers out there than what you first find.

What Do I Do After Applying for a Loan?

You have applied for your loan as a nonresident and now all that is left to do is wait for the authorization.

It can take up to 48 hours for you to receive a loan approval confirmation—it all depends on the individual institution. Once your loan is accepted and you receive the money, make sure to stay on top of your repayments. In order to not forget your monthly payments, we recommend setting up automatic online bank payments. Doing this will help you stay on top of payments without having to worry about it each month!

Please make sure to contact your lender beforehand if you won’t be able to make a payment on time so you can discuss the repayment options available to you.

Be as responsible as possible with your loan repayments—it is the key to your success in paying off the debt. We wish you the best of luck in receiving your loan in the United States and hope you are able to live your own American dream!

Interested in learning more about personal loans for immigrants? Apply to Stilt here.