Bank loans for foreigners

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Bank loans for foreigners

Postby nj.. » Mon Oct 06, 2008 4:19 pm

Which bank provides loan to foreigners who are working in china? As theres no car financing for foreigners in china so i was wondering if there were banks I could get loan from?
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Postby root » Mon Oct 06, 2008 5:02 pm

You should be ask UnderH20. He very close the banks.
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Postby Me_Again » Mon Oct 06, 2008 5:17 pm

I doubt a bank would give a car loan to a foreigner unless they have PR status, if they do the down payment would likely be significant.

Save the money and buy in cash.
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Re: Bank loans for foreigners

Postby underh20 » Mon Oct 06, 2008 6:46 pm

nj.. wrote:Which bank provides loan to foreigners who are working in china? As theres no car financing for foreigners in china so i was wondering if there were banks I could get loan from?


There is auto financing for expats in China.

However, there are no personal loans for expats or even for your average Chinese person.
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Postby nj.. » Mon Oct 06, 2008 7:44 pm

The purpose of loan is only car financing. Which bank offers that? What is the process? Please tell me everything you know about it underh20?
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Postby underh20 » Mon Oct 06, 2008 8:30 pm

Many banks offer auto loans including, but not limited to, ICBC, Merchants Bank and Shenzhen Development Bank.

You can usually finance no more than 60% of the car price excluding tax & license and you must prepay full-coverage insurance for the entire life of the loan.

There are two ways you can go about obtaining the loan. The first way is if you do it without the help of the car dealership. You will need to pay cash for the car and once you have the title to the car, you apply for the loan. Once approved, you turn over the title to the bank and they let you have the money. ICBC will let you apply beforehand so that it is pre-approved, but no loan drawdown until you habd over the title.

If you go through the dealer for financing, they will give you the car as soon as the loan is approved and you have paid your portion of the cost. The dealer handles the title process with the bank.

It's important to realize that the interest rate (APR) is not as uniform like it is when buying a house. You will get the lowest APR by applying yourself directly with your chosen bank, but the major disadvantage is that you first have to pay for the car 100% with your own cash.

If you go through the dealer, there are usually two different options. One is going through the dealer's favorite bank. The interest rate will be the highest -- usually about 9% or slightly more. The other is going through a bank that the dealer recommends, but is not their favorite. The interest rate will be a bit lower (approximately 8%), but the dealer will charge you an administrative process fee of approximately 5k RMB or more. This second option takes longer than the first option.
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Postby nj.. » Tue Oct 07, 2008 12:25 pm

Thanx underh20 for the info. Most of the car dealers except for one of the toyota dealers agreed to apply for a loan but the rest of the car dealers we went to simply said they didnt do auto financing for foreigners. Do you know any dealers who would arrainge car financing for foreigners?
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Postby root » Tue Oct 07, 2008 1:18 pm

So, finally, go to used car market and take something for cash..
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Postby E8L » Tue Oct 07, 2008 1:46 pm

Personal loans are always dealt with a Loan Shark.
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Postby underh20 » Tue Oct 07, 2008 1:57 pm

nj.. wrote:Thanx underh20 for the info. Most of the car dealers except for one of the toyota dealers agreed to apply for a loan but the rest of the car dealers we went to simply said they didnt do auto financing for foreigners. Do you know any dealers who would arrainge car financing for foreigners?


Do you have a work visa and residence permit?

I haven't seen any dealer who would not apply on behalf of an expat. Ask the dealer which bank they deal with and call that bank.
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Postby chingiskhan » Tue Oct 07, 2008 2:41 pm

nj.. wrote:Thanx underh20 for the info. Most of the car dealers except for one of the toyota dealers agreed to apply for a loan but the rest of the car dealers we went to simply said they didnt do auto financing for foreigners. Do you know any dealers who would arrainge car financing for foreigners?


You must be new to China. The answer is always no first if they're not sure, then when you become more assertive and push they will ask someone and realise it can be done after all.
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Postby underh20 » Tue Oct 07, 2008 2:54 pm

^ How true!
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Postby nj.. » Tue Oct 07, 2008 4:16 pm

chingiskhan we've been living here a lil over two years. But its just now we thought of buying a car untill we met this family who had a car and said the traffic was ok and cleared a lot of wrong things we had been hearing from other foreigner friends since two years. I think we will go again with someone who can speak fluent chinese and help us to communicate.

underh20 actaully my hubby has a work visa and a residence permit. We have cash to buy a car but we went to toyota and they had a very nice plan for VIOS which really suited us. But the showrooms we went to they said unless we had a guarentee from a chinese who owned a property in shanghai or if we didnt own a property here then we werent eligible for the loan. But there was one showroom near pujian lu and they said they could send it for approval but the guys said he wasnt sure if it would get approved or not.
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Postby underh20 » Tue Oct 07, 2008 8:30 pm

Unless the lender requires ALL aplicants have real estate, they cannot force that condition on you.
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Postby Me_Again » Tue Oct 07, 2008 8:49 pm

I see some very weird logic in one of those options. Pay for the car first with your own cash, then go and borrow up to 60% of the car value? So if you have the cash, why would you get a loan only to give interest to the bank? Surely the interest on the loan is more than you are likely to receive from investments or bank interest if you saved it...

The purpose of most loans is because the borrower doesn't have the cash.
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Postby underh20 » Tue Oct 07, 2008 9:29 pm

Me_Again wrote:I see some very weird logic in one of those options. Pay for the car first with your own cash, then go and borrow up to 60% of the car value? So if you have the cash, why would you get a loan only to give interest to the bank? Surely the interest on the loan is more than you are likely to receive from investments or bank interest if you saved it...

The purpose of most loans is because the borrower doesn't have the cash.


If you understand the legalities and the process it'll make more sense.

The bank will not give you any money unless they have the title in their hands as security for the loan. You cannot get the title until the dealer registers the car for you. Dealer cannot register the car until they have payment in full either from you or your bank.

This is also why you can generally not get a home equity line of credit or a second mortgage on your home until the first mortgage is completely paid off.
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Postby nj.. » Wed Oct 08, 2008 9:15 am

underh20 wrote:Unless the lender requires ALL aplicants have real estate, they cannot force that condition on you.


I think Ive got lots of info now and this weekend for sure we'll go and check it out. Thanx for the info underh20!
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Postby nj.. » Sun Oct 12, 2008 12:19 am

Hey guys, we went there yesterday and we took a chinese friend with us to help us communicate better. So, we checked witht he bank and at first they didn't give us any positive response but when we went into details and he asked which company my hubby worked...so then he said ofcourse you can get a loan. That was a lil weird! I think If a persons working in a good company they just somehow feel that person is okay for the loan. So when we went to the dealer (went to a diiferent one) he happily accepted and after finishing the paper work he said there are 80 percent chances we can get our car financed.
So, I just think the whole point is security. They maybe think the foreigners can run away without paying the loan off or something?! Next week will get to know If its approaved or not and then we can pick the car up anytime. But before that we have to buy the number.
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Re: Bank loans for foreigners

Postby shanghai_flava » Sun Oct 12, 2008 1:12 pm

underh20 wrote:There is auto financing for expats in China.
However, there are no personal loans for expats or even for your average Chinese person.


What about Home loan?
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Re: Bank loans for foreigners

Postby underh20 » Sun Oct 12, 2008 9:51 pm

shanghai_flava wrote:
underh20 wrote:There is auto financing for expats in China.
However, there are no personal loans for expats or even for your average Chinese person.


What about Home loan?


Yes, home loans are no problem.

By personal loan I meant a loan without any security to back it up.
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Postby shanghai_flava » Mon Oct 13, 2008 7:53 pm

Hi Underh20, thans for the reply.
Ok, I got two questions in this case:
1) Can I qualify as a holder of residence permit for Work? It's renewable every year and not permanent residence.
2) I heard that Chinese nationals should provide at least 30% of the house price as down payment while for foreigners it should be 40%. Is that true?
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Postby underh20 » Mon Oct 13, 2008 8:18 pm

shanghai_flava wrote:Hi Underh20, thans for the reply.
Ok, I got two questions in this case:
1) Can I qualify as a holder of residence permit for Work? It's renewable every year and not permanent residence.
2) I heard that Chinese nationals should provide at least 30% of the house price as down payment while for foreigners it should be 40%. Is that true?


Yes, with a work permit you can qualify for a mortgage. No problem at all.

Actually, the 30 vs 40 percent things depends on whether the Chinese person is buying their first house or a subsequent one.

The rules do state that expats are required to put up 50%, but that rule is seldom enforced. You'll most probably be treated like a Chinese person and required to put down 30% on the purchase of your first house.
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Postby shanghai_flava » Mon Oct 13, 2008 8:23 pm

Great News!! Thanks Mate.
Any bank you would recommend in that regard (lowest interest rate, ...)?
I am thinking about buying a new house (not second hand).
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Postby underh20 » Mon Oct 13, 2008 8:28 pm

Interest rates are pretty much the same in every bank. The one area where banks do differ is in a) the "mafan" in the processing and b) in early payback penalties.

Generally speaking, I'd stick with ICBC. The process is smooth and uncomplicated and you can pay back the loan early without much hassle.
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Postby shanghai_flava » Mon Oct 13, 2008 8:39 pm

Okidoki, I will visit one of their offices to ask about formalities. Once again, thanks for the useful info!
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Postby underh20 » Mon Oct 13, 2008 8:52 pm

The branch that handles the mortgage will differ depending on where you buy your house. Still, any branch should be able to give you general information.

Basically, the only things they will require are:

1. Passport & residence permit;
2. Income statement;
3. Official translation of your passport (especially your name) into Chinese.

The bank's lawyer will likely do #3 for you, but charge you an extra 100 RMB in closing costs. The lawyer's total fee is generally under 1,000 RMB. The only extra expense will be insurance. You must buy property insurance through PICC on the value of the house to protect the bank in case of natural disaster, fire or flooding. That will cost you approximately 30k RMB on a 4 million RMB house. If the mortgage amount is about 700k RMB, the insurance will cost about 11k RMB.
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Postby trader889 » Tue Oct 14, 2008 5:20 am

Underh20, I sent you a pm with some questions on business loans since its off-topic.
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Postby chinamonty » Tue Oct 14, 2008 3:48 pm

Is it possible to buy a used car using a credit card here?
The reason being you could buy it on the card and then transfer funds in your home country to pay off the card saving the hassle of bringing money in.
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Postby underh20 » Tue Oct 14, 2008 8:59 pm

In a word: no.

No Chinese car dealer will take international credit cards because of the associated merchant fees. They only take UnionPay cards because there is a 50 RMB cap on interchange fees.

You could, though, take a cash advance on your card and then pay it off when the bill comes. That would be like shooting your balls off, though, because at least for all Chinese credit cards there is a 3% cash advance fee. For international cards the cash advance fee is roughly the same plus an additional currency exchange fee -- perhaps another 3%.
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Postby chinamonty » Wed Oct 15, 2008 11:22 am

I thought as much but a dealer in Zhuhai did offer me this option which I thought was "brave" of him. I didnt buy a car as it turned out.
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