Welcoming the Hand that Feeds You — Personal Loan Requirements in the US and UAE

This post brought to you by HSBC.

You’ve probably heard in the news how a worker spoke disparagingly about her boss on Facebook, forgetting they were ‘friends’ on the site. Predictably, he dismissed her there and then on the spot.

You rely on your employer so that you can bring home the daily bread. Just as in the USA, this is true in the UAE. However, in the UAE, your employer holds even greater power over you: when you apply for a personal loan, they can determine whether your application is successful.

So if you’re applying for a personal loan, here’s what you’ll need in the US, and if you’re an expat in the UAE, here’s what to expect:

What do you need in the US?

• Identification — normally, a driver’s license is enough, but you must also provide your personal details and a social security number. The bank or money lender uses this info to run a credit check on you i.e. to confirm that you’re a reliable lender. Though some banks or lenders are flexible, you need a credit score of 660 or more to secure a loan.
• Employment details — proof that you work is always good! This would be your two most recent pay slips. The bank uses these not just to confirm how much you earn, but also to compare it with your current liabilities and check that you can repay the loan.
• Tax statements — you’ll have to bring the W2s from the tax returns of the last two years to confirm that you haven’t defaulted on your tax obligations and won’t have the IRS knocking on your door.
• Previous bank statements — of course, the bank should already have access to these, but bring them anyway to show that you’re paying other creditors, such as electricity companies, phone companies, etc.

What you need in the UAE — A Worthy Employer!

Yep, banks in the UAE look at slightly different things when you apply for a personal loan. Believe it or not, both you and your employer fall under the bank’s scrutiny. Things the bank will consider are:

• The company’s presence (or absence) on its list of approved companies.
• The amounts you earn and owe currently.
• The length of time you’ve worked for your employer.
• The type of company you work for.

The reassuring news is that the UAE Central Bank has also created some new rules to protect you as a borrower. For instance, banks can’t lend you any more than 20 times your regular income, and the maximum repayment period is 48 months.You can also wave a blank check in front of the bank’s nose (not recommended!), but banks aren’t allowed to accept them against loans.

So when you’re applying for a personal loan in the US, bring proof of your identity, income, and of how you’re paying all your debts. If you’re moving out to the UAE, you should bring proof of these same things, of course, but more importantly, you should hope that your employer’s track record is as good as yours. Like the dismissal on Facebook, it may make the difference between whether you go into work or not the next day, but for different reasons.

Click here for more information on banking in the UAE.