Foreign loans (offshore lending) in Vietnam

The process of getting credit in a foreign bank is tedious. Different banks and credit services have different policies on how they regulate their credit system.

In this article, I shall share some of the basic requirements to help you secure a loan in a foreign bank. Let’s have a look;

  1. Bank account

The first step to securing credit in a foreign bank is to have a bank account.

Now, it’s not as easy as it may sound because the process of getting a traditional bank in a different country is often longer.

For instance, in the UK you must have proof of address. The proof of address is done by checking your ID name and the proof of address at your name. 

Proof of address is needed to ensure that no bank account is opened under false identities.

Having a bank account can also give you access to small services like instant credit (often smaller amounts of money). 

  1. Proof of identification and residence 

Different foreign credit companies have different policies on the format of securing a loan.

After ensuring that you have a valid bank account where the money will be wired to a credit service is likely to request the following documents as proof of identification;

  • ID – National, military ID; 
  • VISA
  • Citizenship/residence certificate 
  • Licence – Business licence, drivers licence
  • Proof of address

The documents are needed to ensure that the owner of a bank account is the same person seeking out credit. 

For business, loan identification will be through valid incorporation documents, business residence, business accounts, etc. 

The documentation presented in a business setting should have been signed by the respective business authority, CEO, president, or manager. 

  1. Bank statements and accounts 

An analysis of bank statements only gives a credit company an overview of your spending habits, your debts, regular income, so that they can decide whether or not you are a good fit to be given a loan. 

It is also a verification of income or revenue (for businesses) to gauge whether you are likely to repay the loan.

Some of the bank statements in a business setting will include, statements of revenue, the company’s financial position, equity statements, cash flow statements, invoices etc. 

  1. Income

Proof of income is needed in cases where the reduction has to be taken from your income.

For instance, if you have a two-year contract of employment, credit services will ensure that the period of the loan does not exceed the duration of your employment.

You will often be needed to supplement your;

  • Work visa or 
  • Contract of employment
  • Foreign business incorporation permit

This is not to say that you cannot get a loan from a foreign bank if you have no proof of income. Student credit services often if you are a loan without proof of income. 

Getting a loan without proof of income calls for high-interest rates or lower principal amounts. 

  1. Tax compliance 

Regulations dictate that all individuals must complete filing their tax returns failure to do so will be considered non-compliant.

Foreign businesses must fall in line with international tax laws, regulations and requirements.

  1. Credit score 

A credit score is another thing you have to check when moving to a foreign country.

There is no universal credit score system different money-lending companies have their methods and ways to calculate the credit score.

What remains firm is that when you’re moving to a different country you cannot transfer your home country’s credit score to secure a loan. It means you have to start afresh.

It can be a huge setback for getting foreign loans but over time you can build your credit score.

  1. Security/ collateral 

Any foreign credit services will require somebody to take out a loan to issue collateral or security.

It represents a promise you make to the credit service that in case you failed to you pay the money the credits service will exercise their right to sell or take charge over the property you supplemented the security. 

The most common type of security in real estate property, cash, guarantees, land, or any type of property. 

The value of the security should be of the same value or more as the amount of credit.

In a case where the value of the security is higher than the amount borrowed the credit lending company will be under obligation to exercise its rights over the security only to the extent of the amount issued.