Applying for a Personal Loan as a Foreigner Working in Malaysia
Shopping for the best deals on a personal loan can be very discouraging. Foreigners, just like every other ordinary Malaysian, appreciate the use of a good personal loan to help pay off multiple bills or credit card balances. However, it isn’t quite as easy for these foreigners to get approval for personal loans in Malaysia as it is for local applicants. This is due to the understandable risks that banks will have to take on when issuing an unsecured loan to someone with no local ties.
Still, it is not impossible for foreigners to successfully apply for a personal loan in Malaysia. Besides these myths regarding personal loans, here’s what you need to know before applying.
The Application Process
The process of applying for a personal loan is relatively similar to how a Malaysian citizen or permanent resident would apply for one, with the exception of certain document requests made to foreigners. For instance, most banks would require a working permit, visa (with at least one year remaining before expiration) or employment contract from foreign personal loan applicants. Apart from these, however, the criteria for both locals and foreigners remain the same.
You would have to fill out an application form and submit it along with the necessary documents, then wait for the application to be processed. Processing durations will vary according to the bank; some offer quick same-day approvals while others can take up to two weeks.
Here’s a list of the usual income requirements and documentation for foreigners do note that it may vary so always check the fine prints:
- Minimum monthly income of RM3,000
- Must be 21 years old and above
- A copy of passport, visa or work permit
- Bank account statement for the last six months
- Three months’ salary slip and Malaysian employment contract letter
- Business registration certificate or license and income tax forms (for self-employed)
What you can do to improve your chances
In addition to supplying all the necessary documents, you’ll need to lay the groundwork to upgrade your credit status before you apply. Expectedly, this would be from scratch since your credit score from your homeland does not follow when you migrate.
Thus, it’s not practical to assume that you can get a loan as soon as you land, in fact, you should hold on to existing cards in the meantime (if any) and gather your financial strength before you apply. Here’s how to do it:
1.Start with a bank account
Open a savings or current account with a bank for which you plan to apply for a personal loan. This will help you create a relationship with the bank and allow you to build better credit with them before you apply for your loan. Showing healthy spending and saving habits could improve the chances of your personal loan application.
You might also want to open a fixed deposit account with the bank you choose. This could alleviate some of the risks associated with issuing you a personal loan as banks typically reserve the ‘right to set off’ dues. In other words, the bank will have access to cover what you owe by transferring money out of fixed deposit or savings accounts held with them.
2.Report all income
Note that although the basic income requirement is RM3,000 for most banks, this does not mean that you will be guaranteed a personal loan if you are earning at this level. In fact, with everything considered, the higher your income, the better your chances for approval. Thus, if you are earning a supplementary income, be sure to include it in your taxes and as you apply. Furthermore, if you have at least two years of tax returns to show, this will likely bolster your application as it theoretically proves more stable earnings.
In addition, note that your employment status matters as well; a long-term work contract will appear much steadier when compared to temporary employment or freelancing, for instance.
Now you know what to do before you apply, here’s how to handle the application itself.
3. Apply in person
Bank websites will not only list application criteria, most will allow online applications but you might have a better chance if you make the trip and apply in person. This will give you a chance to speak face-to-face with a bank officer, ask questions, get advice on how to improve your chances and possibly even expedite the processing of your application.
You’re also likely to avoid delays in case of missing documents as you will be alerted on the spot by the officer.
4. Choose the right bank
Smaller local banks may not easily approve personal loan applications for foreigners but larger, international institutions might be more agreeable. To support your application, get an introducer, which is a bank loaner in good standing from the same bank, to write an introduction letter. This would serve as a type of reference and could help with your application. Choose the right bank that works for you, and keep in mind not to make these mistakes!
5. Apply for a ‘beginner’ Personal Loan
You can always upgrade your loan and increase your limit later on. For your first application, especially if you have been turned down before, do consider applying for a low-limit, low-interest ‘classic’ loan. Bear in mind, issuing banks may have different ways of evaluating a personal loan application, so if you are turned down at one bank, you can still apply elsewhere. Be sure to ask why your loan application was rejected and try to work on these issues before you apply again.
Things may be harder if you're a foreigner and generally don't make much, but here are our top three personal loans recommended for you to get you started.