How to Obtain a Credit Loan in Korea for Non-Koreans
Like all finance-related matters for non-citizens in Korea, the question of whether a personal credit loan is obtainable or not is a tricky one with many determining factors. To answer it in a nutshell- it is possible for a non-Korean citizen to obtain a bank credit loan- albeit not so simple.
For banks, their understandably biggest concern are the risks associated with lending out a loan to an individual who is not a citizen of the country. Not only are there fewer jurisdictions over a non-citizen but there are less ways to verify their credit score. Even if a loan is given there is always the worst case possibility that the borrower could take flight from the country.
As such, banks shunned the very notion of extending loans to most non-citizens until 2013 when KEB (Korea Exchange Bank), one of Korea’s biggest banking institutions, made ripples in the industry by becoming the first major Korean banking institution to allow unsecured loans to qualified non-Koreans. Prior to KEB’s move, it was a near impossibility for non-Koreans to obtain almost any kind of loan- no matter how lofty the occupation or how high his or her salary was.
Since 2013, a number of other major Koreans banks have moved to follow in KEB’s footsteps, at least on paper, but the actual results seem to vary by bank, case, individual, and is not a guarantee. Like all important financial information, we advise you to consult with your bank or financial institution on whether you qualify and, if so, how you can obtain a loan but here is a general look at what some of the factors are that banks look into.
The important thing to keep in mind is that your bank will need to be assured you are not likely to take off from Korea with their money. They determine this through a thorough review on your background including your occupation. Not only will they want to know that you have a steady, consistently paying job but also who your employer is, your exact position, your salary, how many years you have worked for the company, etc. Generally the occupational standards set by banks for non-Korean citizens to qualify for a loan are fairly high which means usually they are in upper ranking, higher salary positions such as executive expats sent here by international companies. Your bank may also want to see if you have financial ties or collateral in Korea such as in any local investments, stocks, real estate, etc.
For the many individuals who work in a hakwon, public school, restaurant, bar, etc, you may still qualify with your bank if you have an established history and good standing with them. To determine such standings, your bank will review things such as how long you have been in Korea, how long you have been a customer with them, if you have paid your bills on time, etc. Additional factors taken into consideration include such details as whether you have been a loyal and diligent credit card user of your bank and a reputable history of frequent financial transactions that give credit to your standings.
At the bank you’ll need to provide a number of official documents and evidence including your alien registration card, proof of employment, proof of your salary (such as a pay stub), etc. The exact requirements can vary according to your bank so ask in advance what you’ll need to bring. Note that if you do get approved, the limits and conditions on your loan (such as maximum amount you can borrow, interest rates, loan period, etc) will be determined by the bank.
Like any loan however, there is no guarantee of approval even if you fit the parameters set by your bank. Each individual’s case, documents, and financial standings are thoroughly reviewed, and outcome decided, by your bank. And, as noted earlier in this post, Korea has only recently begun opening up loan options for non-citizens so you may want to anticipate some bumps, confusion, and frustrations.
As with many financial and legal options in Korea, one way to make the process a bit easier and increase your likelihood for approval is if you can find a Korean co-signer for a loan (such as through a Korean spouse, business partner, etc). Of course, even in such a case the bank will scrutinize the credit ratings of your Korean co-signer among other things but if that’s an available option for you this will most likely be your best bet in securing a loan- at least with the least hurdles.