Personal loans for undocumented immigrants: Do they exist?

If you are a foreigner living in the United States, surely you need to take out a personal loan to pay for your studies or your home. Therefore, you have to know that what you are looking for is totally possible and that There are several personal loan options for undocumented immigrants.

Although we all know that being an undocumented foreigner in the United States has many limitations, taking out a personal loan for undocumented immigrants is not something impossible to achieve. Currently not all lending institutions offer personal loans for undocumented immigrants. But do not be discouraged, many undocumented foreigners have obtained their personal loans for non-residents because there are several options available in the market today.

Requirements for a personal loan for undocumented immigrants

Although this varies greatly depending on the lending institution, it is safe to say that the most important thing for all of them is to know where you stand with respect to credit. Although it is possible, It is not recommended to take out personal loans without credit because the interest rates are much higher and it is possible to fall into some legal traps.

Your credit history shows how you have handled credit in the past. It forms the basis of your credit score, and lenders use it to measure the risk involved in lending you money. If lenders can’t check your history with one of the three major credit bureaus in the US, they will be reluctant to give you credit. But nevertheless, If you can build a solid track record, you’ll be able to borrow money when you need it and get good interest rates and favorable terms.

But as you well know, it is not easy to get a credit card as an undocumented immigrant precisely because you do not have a social security number (SSN). However, there are some alternatives to build credit in the United States and thus make it possible for lending institutions to trust you:

How to build credit

For undocumented immigrants, ways to build credit in the United States are to use a secured credit card, get a co-signer, or become an authorized user of a friend or family member’s credit card.

Times are changing and now there are about 10.5 million undocumented immigrants who inhabit US soil And more and more financial institutions are allowing people without social security numbers to open checking accounts and apply for credit cards, car loans and home mortgages, all of which help build credit. As an alternative to the SSN, you should get an ITIN (Individual Taxpayer Identification Number) and look for a financial institution that accepts your ITIN as an alternative identification to the SSN.

How to get an ITIN

If you are not eligible to obtain a social security number you can still apply to receive a Personal Taxpayer Identification Number or ITIN. Many banks and financial institutions allow their customers to obtain a credit card without an SSN but with an ITIN instead. This number is used by the Internal Revenue Service (IRS) to account for tax returns and payments for resident and non-resident aliens with U.S. tax filing requirements. There are three ways to apply for an ITIN:

  1. By mail. Fill out Form W-7, Request for Personal Taxpayer Identification Number from the IRS. Be sure to submit it with your federal tax return along with the original or certified copies of documents that prove your identity and foreign status. You will not be able to file your return electronically without the ITIN, so you will need to file a paper return and mail it to the following address:

Internal Revenue Service

Austin Service Center

ITIN operation

PO Box 149342

Austin, TX 78714-9342

  1. With an agent in person. Fill out Form W-7 and request in person the services of an IRS-authorized Certified Acceptance Agent.
  2. At an in-person assistance center. Fill out Form W-7 and make an appointment at an IRS Taxpayer Assistance Center.

Options 2 and 3 allow you to apply for an ITIN without submitting your original documents. If you qualify and your application is complete, you will receive a letter from the IRS with your ITIN within seven weeks.

The instructions for Form W-7 list 13 acceptable documents that you can use to establish your identity and foreign status. At least one must include a photograph, unless you are applying for an ITIN for a dependent under the age of 14.

Acceptable documents include:

  • Passport
  • Photo ID from United States Citizenship and Immigration Services
  • The visa issued by the United States Department of State
  • US driver’s license
  • United States military identification card
  • Foreign driver’s license
  • Foreign military identification card
  • National identification care (including your name, photograph, address, date of birth and expiration date)
  • United States State ID card
  • Foreign Voter Registration Card
  • civil birth certificate
  • Medical records (for dependents under 6 years of age)
  • School records (for a dependent under the age of 18, if a student)

If you mail your documents, the originals will be returned to you at the mailing address you provided on Form W-7. The IRS says you can expect to receive them within 60 days.

However, sending your original documents puts them at risk of getting lost in the mail, ending up in the wrong hands, and exposing you to identity theft. For that reason, it’s a good idea to apply in person whenever possible.

Watch your credit

Once you start using credit, it’s important to monitor your credit report to make sure the information on your report is correct and to keep your credit in good standing. Later, you will see that Having a good credit is essential when it comes to getting a good personal loan.

Unfortunately, most credit monitoring services and automated credit reporting systems require you to enter a social security number to use the service. To access credit monitoring without an SSN, you’ll need to write to each of the three major credit bureaus (Experian, Equifax, and TransUnion) to request a copy of your credit report.

You are entitled to one free credit report from each of the three major credit reporting agencies each year.

choose a lender

There are many options on the market that can grant personal loans for undocumented immigrants, but be careful. Avoid predatory lenders: payday loan companies and other high-interest, high-fee personal loans, and seek out legitimate banks and credit card companies that serve underserved populations like undocumented immigrants.

The annual interest rate or APR (annual percentage rate) is an important indicator. In fact, The personal loan with the lowest annual interest rate is generally the best option if there are no other more important things in the fine print.

What are the appropriate interest rates for a personal loan for undocumented immigrants?

Rates vary from lender to lender and largely depend on your credit history and ability to pay, but here’s what the average personal loan interest rates are:

how is your credit score Annual rate
Excellent 720 – 850 13.9%
Okay 690 – 719 18.0%
Regular 630 – 689 21.8%
Bad 300 – 629 27.2% (unlikely to even qualify)

Considerations

  • Interest rates on a good personal loan are below 5% per year, but if you can qualify for a credit card with 0% interest, and pay off the balance within the promotional period, then you may be better off with the credit card. credit.
  • Calculate loan payments so you have an idea of ​​what to expect while you’re paying.
  • If you have bad credit, there are several methods to get it. For example, find a co-signer. Having a guarantor with good credit allows you to take advantage of their creditworthiness and get a potentially better interest rate.
  • Try to stay away from personal loans without credit.
  • Consider a security loan. You can put up a car, savings account, or other asset as collateral and get a lower rate.
  • If the money is for debt consolidation, only borrow it if it will get you out of debt faster. Avoid further debt.

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