Can expats get bank loans?

Dear Michelle,

I’m a foreigner. Can I get a loan?

~Loaner

Dear Loaner,

Yes, you can get a loan. You should keep in mind though, that loans involve a complex application and approval process (just like back home!), and depend on your unique circumstances. Also, there are certain types of loans that foreigners are not able to apply for.

1. Mortgage Loans:

For the purchase of a house or apartment (that is already built) you, as a foreigner, are eligible to apply for a mortgage loan from Shinhan Bank. The eligibility criteria are the same as those that Korean nationals must meet and are mostly based on your credit rating (from an independent credit bureau in Korea)* and on the value of the collateral (house or apartment).

2. “Chon-sae” (전세) Loans:

Korean renters often hand a large sum of money over to their landlord when the first move in to avoid paying monthly rent. This lump sum deposit is called “key money” or “chon-sae” (전세).

In order to be eligible for a “chon-sae” loan from Shinhan Bank, an individual (foreign or Korean) must get a Certificate of Guarantee issued by the Seoul Guarantee Insurance Company (www.sgic.co.kr). Unfortunately, the SGIC will currently only issue a Certificate of Guarantee for a “chon-sae” loan to Korean nationals.

3. Personal Credit Loans:

While difficult, it is not impossible for a foreigner to get a credit loan in Korea. One way is if the borrower has an excellent credit rating, the Shinhan Head Office may grant special approval of the loan. A more common way is for the borrower to find a Korean guarantor (co-signer) who also has a good credit rating. Another possibility is applying for either a fully or partially secured collateral loan; if you own real estate in Korea (house, apartment, or land), have money invested in a time deposit or the Korean stock market, you can use this collateral to secure a credit loan.

*FYI:

Credit Rating: An independent credit bureau uses a lot of criteria to determine a person’s credit rating, including:
-Income
-Occupation
-Tax payment history in Korea
-Credit card spending
-Timeliness of bill payments
-Other debt
-Overall financial history in Korea
-Shinhan customer status

*Credit Bureaus in Korea:
-Korea Credit Bureau (KCB)
-Korea Information Service (KIS)
-National Information & Credit Evaluation (NICE)

(Submit your banking questions to farnsworth@shinhan.com)

“Dear Michelle: Banking Advice for Foreigners in Korea” is a monthly column written by Michelle Farnsworth. Michelle is an 8-year resident of Korea who is currently the Foreign Client Relationship Manager at the Shinhan Bank Seoul Global Center – the only bank branch in Korea that is exclusively dedicated to serving foreigners and foreign companies. Please visit the “Shinhan Bank Seoul Global Center” on Facebook for more information. Also, please note that the banking information provided in this column is based on Shinhan Bank policies and may not be applicable to all banks in Korea.