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Comprehensive Guide to Personal Loans for International Students

Navigating the financial landscape as an international student in the USA can be challenging. Our comprehensive guide is here to help. From understanding eligibility to exploring options with or without a cosigner, we'll walk you through each step of securing a personal loan. Learn about key lenders, their rates, and requirements, and make an informed decision about financing your education.
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Updated:
28.02.2024
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The Legal Status of Personal Loans for International Students in the USA

Federal laws concerning loans for international students are primarily governed by the Higher Education Act of 1965 and its subsequent amendments. The U.S. Department of Education oversees federal student aid programs, ensuring they adhere to the legal requirements set forth in these regulations. It's advisable to consult with a legal or financial advisor to understand the specific laws and regulations pertaining to loans for international students.

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CreditFresh
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The assistance I received was exceptional. My representative handled my case with care and provided all the necessary information...
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OneMain Financial
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The loan application process was straightforward, and the representative I interacted with displayed patience, provided informative answers, and was quite pleasant throughout...
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The process was swift and straightforward, which was particularly helpful during a time when, despite my reluctance to seek assistance, I genuinely needed help.
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Comprehensive Guide to Personal Loans for International Students

What are Personal Loans for International Students in the USA?

Personal loans for international students in the USA serve as a valuable financial resource, providing access to funds that can help cover various expenses while pursuing higher education. These private loans are specifically designed to meet the unique needs and challenges faced by international students studying in the United States.

What distinguishes personal loans for international students from other forms of financing is their accessibility and flexibility. Traditional loans, such as federal student loans, may be limited to U.S. citizens or permanent residents. However, personal loans cater specifically to the diverse student population that comes from abroad to pursue educational opportunities in the United States.

International students often encounter financial hurdles when it comes to funding their education and living expenses. They may face restrictions on part-time employment or encounter difficulties in securing a co-signer, which is a common requirement for traditional loans. Personal loans for international students bridge this gap by offering financing options that are accessible and attainable.

These loans typically do not require collateral or a co-signer, which can be a significant advantage for students who may lack these resources. Instead, eligibility is primarily based on factors such as enrollment status, academic progress, and the student's ability to demonstrate their capacity to repay the loan. This flexibility enables international students to borrow funds without undue burdens or unnecessary obstacles.

The funds obtained through personal loans can be utilized for various purposes, making them suitable for covering a wide range of expenses. Whether it's tuition fees, accommodation costs, textbooks, living expenses, or other educational needs, personal loans offer the freedom to allocate funds according to individual requirements. This versatility ensures that international students can effectively manage their financial obligations while focusing on their studies and overall academic experience.

It is important to note that personal loans for international students typically come with interest rates that reflect the risk associated with lending to non-U.S. citizens or permanent residents. As a result, it is advisable for students to compare and carefully consider different student loan amount options to ensure they secure the most favorable terms available. Exploring multiple lenders and loan products can help students identify the most competitive interest rates and repayment conditions.

Features

Personal loans for international students in the USA offer several key features that make them a suitable financing option for students pursuing higher education. Here are some notable features of personal loans for international students who unfortunately cannot count on federal student aid:

  1. Credit Building Opportunities. Responsible repayment of personal loans provides international students with an opportunity to establish and build their credit history in the United States. Consistent, on-time payments can contribute positively to their credit profile, which may be beneficial for future financial endeavors, such as renting an apartment, applying for credit cards, or securing other loans.

  2. No Co-signer or Collateral Requirements. Unlike many traditional loans, personal loans for international students typically do not require a co-signer or collateral. This makes them accessible to students who may not have a U.S. citizen or permanent resident willing to co-sign their loan or lack valuable assets to pledge as collateral.

  3. Flexible Use of Funds. Personal loans can be used to cover various expenses related to education, such as tuition fees, textbooks, accommodation costs, living expenses, transportation, and other educational needs. This flexibility allows international students to allocate funds according to their specific requirements.

  4. Competitive Interest Rates. While personal loans for international students may have higher interest rates compared to loans available to U.S. citizens or permanent residents, it is still possible to find competitive rates by comparing different loan options. Researching and comparing interest rates and repayment terms from multiple lenders can help students secure the most favorable rates available.

  5. Repayment Options. Personal loans typically offer various repayment options to accommodate different financial situations. Students can choose between fixed or variable interest rates and select repayment terms that align with their budget and financial capabilities. Some lenders may also offer deferment or forbearance options in case of financial hardship or unexpected circumstances.

  6. Borrowing Limits. Personal loans for international students typically have specific borrowing limits, which may vary depending on the lender and the student's academic program. These limits help ensure responsible borrowing and prevent students from taking on excessive debt.

Pros and cons

Pros

Accessibility. These loans provide financing options specifically tailored for international students, allowing them to access funds for their educational expenses without requiring a co-signer or collateral.

Flexibility. Personal loans can be used to cover various education-related costs, providing students with the freedom to allocate funds according to their specific needs.

Credit Building. Responsible repayment of personal loans can help international students establish a positive credit history in the USA, which can be beneficial for future financial endeavors.

Cons

Higher Interest Rates. Personal loans for international students typically come with higher interest rates compared to loans available to U.S. citizens or permanent residents, reflecting the higher risk associated with lending to non-U.S. citizens.

Limited Borrowing Limits. Personal loans may have specific borrowing limits, which can restrict the amount of funds available to international students, potentially requiring them to seek alternative sources of financing.

Repayment Obligations. International students must carefully plan their repayment strategy and ensure timely payments to avoid any negative impact on their future credit history and financial stability in the US.

How to get a Personal Loan for International Students in the USA?

Apply for a loan

  1. Research lenders like Stilt, MPOWER Financing, and Prodigy Finance.

  2. Check eligibility requirements based on enrollment, visa status, and academic progress.

  3. Gather required documents, such as passport, visa documentation, enrollment proof, and financial statements.

  4. Compare loan terms, including interest rates, repayment options, and fees.

  5. Complete the online application with accurate information and attach the necessary documents.

  6. Await loan approval, which may take a few business days.

  7. Review and accept the loan offer, considering the loan amount and terms.

  8. Receive funds and establish a repayment plan to make timely payments.

Requirements and conditions

  1. Enrollment in an Eligible School. Typically, lenders require international students to be enrolled in a recognized educational institution in the US. This can include universities, colleges, or vocational schools.

  2. Valid Student Visa and Documentation. International students must have a valid student visa, such as an F-1 or J-1 visa, and provide appropriate documentation to verify their legal status.

  3. Academic Progress. Lenders may require proof of satisfactory academic progress, such as transcripts or enrollment verification, to ensure that the student is actively pursuing their education.

  4. Demonstrated Ability to Repay the Loan. International students must show their capacity to repay the loan. This can be done by providing proof of income, bank statements, or demonstrating financial support from a reliable source, such as a sponsor or family member.

  5. Minimum Age Requirement. Most lenders have a minimum age requirement for loan applicants, typically 18 years or older.

Best places to get a Personal Loans for International Students in the USA today 28.02.2024

Stilt

Apply for a loan

Stilt is a financial technology company that provides personal loans to immigrants, including international students. They offer competitive interest rates, flexible repayment terms, and no co-signer or collateral requirements.Stilt

MPOWER Financing

Apply for a loan

MPOWER Financing specializes in providing loans to international students. They consider factors such as academic progress, future earning potential, and career path rather than relying solely on credit history. They offer competitive interest rates and tailored repayment options.MPOWER Financing

Prodigy Finance

Apply for a loan

Prodigy Finance is a global lending platform that focuses on funding international students studying abroad. They offer loans without requiring a co-signer or collateral, and they consider factors such as future income potential and field of study.Prodigy Finance

Discover

Apply for a loan

Discover offers personal loans for international students studying in the USA. They provide competitive interest rates, flexible repayment options, and no application or origination fees. They also offer private student loans and international student loans.Discover

Citizens Bank

Apply for a loan

Citizens Bank offers personal loans for international students studying in the USA. They provide fixed or variable interest rate options, flexible repayment terms, and the possibility of co-signer release after a certain period of responsible repayment.Citizens Bank

Ways to receive the money

  1. Electronic Transfer. The lender may transfer the loan amount directly to the student's bank account. The student will need to provide their banking information, including the account number and routing number, to facilitate the transfer.

  2. Check or Prepaid Card. In certain situations, the lender may issue a check or provide a prepaid card loaded with the loan amount. The student can then deposit or use the funds according to their needs.

Disbursal in cash is less common for personal loans for international students in the US. Most lenders prefer electronic transfers, school disbursals, or issuing checks/prepaid cards for fund distribution. Disbursal in cash may involve additional logistical challenges and security considerations.

Things to pay attention to

  1. Eligibility Criteria. Understand the lender's requirements regarding enrollment status, visa documentation, academic progress, and financial capability.

  2. Interest Rates and Fees. Compare interest rates and any additional fees associated with the loan. Look for competitive rates and consider the overall cost of borrowing.

  3. Repayment Terms. Evaluate the repayment options available, including the length of the repayment period and the flexibility of the terms to ensure they align with your financial situation.

  4. Borrowing Limits. Determine the maximum loan amount offered by the lender to ensure it meets your funding needs while considering responsible borrowing practices.

  5. Application Process. Familiarize yourself with the lender's application requirements and process, including necessary documentation and any language or translation considerations.

  6. Customer Support. Assess the quality of customer support provided by the lender, including availability, responsiveness, and language support.

How to repay a Personal Loans for International Students in the USA?

  1. Set Up a Repayment Plan. Create a budget and plan for loan repayment. Consider your income, expenses, and other financial obligations to determine an affordable monthly payment amount.

  2. Automatic Payments. Explore the option of setting up automatic payments with the lender. This ensures that your loan payments are deducted directly from your bank account on the designated due dates, minimizing the risk of missing payments.

  3. Manual Payments. If automatic payments are not an option, make sure to mark the due dates on your calendar or set reminders to make manual payments on time. Consider using online banking or mobile banking apps to conveniently initiate payments.

  4. Payment Methods. Confirm the accepted payment methods with the lender. Payments are typically made through electronic transfers, debit cards, or checks. Choose the method that is most convenient for you.

  5. Early or Additional Payments. If possible, consider making early or additional payments towards your loan. This can help reduce the overall interest paid and shorten the repayment period.

Depending on your circumstances, exploring options such as loan consolidation or refinancing private loan with another lender might help make your loan repayment more manageable.

Alternatives

Apply for a loan

  1. Credit Builder Loans can help international students establish or improve their credit history. These loans typically require a deposit as collateral, and the borrowed amount is placed in a savings account. As you make timely payments, you build a positive credit history, which can help you access better loan options in the future.

  2. Credit Cards. F-1 students studying in the US have the opportunity to apply for credit cards, provided that the credit card issuer accepts Individual Taxpayer Identification Numbers (ITIN) in lieu of Social Security numbers. International students who possess an ITIN can meet the eligibility criteria for credit card applications, allowing them to access the various advantages and convenience that credit cards offer. By utilizing their ITIN, F-1 students can embark on establishing credit history and managing their finances effectively while enjoying the perks associated with credit card usage.

  3. Institutional Loans. Some universities or colleges offer their own loan programs specifically for international students. These loans may have more favorable terms or be tailored to meet the unique needs of international students.

  4. A Personal Loan with a Co-signer. If you have a trusted U.S. citizen or permanent resident who is willing to co-sign the loan, you may qualify for a more competitive interest rates and repayment options meeting the certain minimum credit criteria.

  5. Peer-to-Peer Lending Platforms connect borrowers with individual lenders who are willing to provide loans. These platforms often have more flexible lending criteria and may consider factors beyond traditional credit history.

  6. An International Student Loan from Your Home Country. Some countries or organizations offer loan programs specifically for students studying abroad. These loans may have favorable terms and conditions, so it's worth exploring options available in your home country.

Editorial opinion

As more international students flock to the United States to pursue higher education, the demand for accessible financing options has grown. Personal loans tailored for international students offer a promising solution, bridging the financial gap and empowering students to fulfill their educational aspirations. However, the allure of these loans must be met with a cautious approach and a keen sense of financial responsibility. Personal loans for international students provide a lifeline to those who face limitations in obtaining traditional funding sources, because federal financial aid is not intended for international students. These loans offer the flexibility to cover various expenses, including tuition fees, accommodation costs, textbooks, and living expenses. By eliminating the need for collateral or co-signers, these loans grant international students the freedom to pursue their educational dreams without undue financial burdens. While personal loans can be a gateway to educational success, they come with significant responsibilities. It is imperative for international students to exercise prudence and mindful financial planning. The higher interest rates associated with personal loans for non-U.S. citizens underscore the importance of borrowing only what is necessary and carefully considering repayment capabilities. To navigate the financial landscape successfully, international students must approach personal loans with a well-defined plan. Creating a comprehensive budget that accounts for tuition, living expenses, and loan repayments is paramount. By understanding the terms and conditions of different student loan options well, students can make informed decisions that align with their financial goals. Thoroughly researching and comparing loan options from various lenders is essential. Interest rates, repayment terms, and additional fees can significantly impact the overall cost of the loan. International students should explore reputable lenders specializing in loans for their unique circumstances, such as Stilt, MPOWER Financing, and Prodigy Finance. While personal loans hold the promise of a brighter educational future, students must remain cautious. Unexpected financial hardships can strain the ability to meet loan obligations. Falling behind on monthly payments can have detrimental consequences, impacting credit scores and long-term financial stability. Students should be proactive in contacting lenders if difficulties arise, seeking possible alternatives or adjustments to repayment plans. Personal loans for international students serve as a valuable resource, offering the means to pursue education in the United States. However, this opportunity must be met with responsible financial decision-making. By borrowing wisely, developing a comprehensive repayment plan, and seeking support when needed, international students can strike a balance between educational dreams and financial well-being.

Important

Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your state. You can verify this information with your state regulator or attorney general.
  2. Check if the lender is a member of a reputable association, such as the Community Financial Services Association of America. Membership in such organizations may provide an extra level of reliability.
  3. Carefully review all the terms and conditions of your loan contract.
  4. Thoroughly examine the interest rates and ensure that your contract includes a detailed breakdown of the total cost of the loan.
  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.
  6. Choosing a lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.

Methodology

At Finanso, we've carried out a comprehensive analysis of over 50 microfinance organizations, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.

Additional resources

To learn more about personal loans for international students and best practices, check out some of the following resources:

Sources

FAQ

How to get a loan if I am an F-1 student?

F-1 students have various options to explore when seeking a loan to finance their education and living expenses in the United States. While obtaining loans may come with challenges, understanding the available avenues can help navigate the process effectively.

One option is applying for personal loans specifically designed for international students studying in the US. Certain lenders specialize in providing loans to F-1 students, considering factors beyond traditional credit history, such as future earning potential and academic progress. These lenders may have flexible eligibility criteria and offer competitive interest rates, making them a viable choice for financial support.

When applying for a loan as an F-1 student, be prepared to provide documentation verifying enrollment in an eligible educational institution, proof of F-1 student visa status, and the ability to repay the loan. This can include demonstrating financial capacity through bank statements, proof of income, or financial support from a sponsor or family member.

Another option is exploring loans offered by educational institutions. Some universities and colleges have loan programs specifically tailored for international students, taking into account their unique financial challenges. These institutional loans may have more favorable terms or be more accommodating to international students' circumstances.

Additionally, reaching out to the financial aid offices at the institution can provide information about scholarships, grants, or work-study opportunities that can help reduce the need for loans. Maximizing these types of financial aid can lower the overall loan amount and ease the burden of repayment.

Can international students take bank loans?

Yes, international students can take bank loans in certain circumstances. However, obtaining a bank loan as an international student can be more challenging compared to citizens or permanent residents. Banks typically have stricter requirements for the best international student loans and may require a co-signer or collateral to secure the loan. Additionally, international students may face limitations due to their limited credit history or unfamiliarity with the US banking system.

To increase the chances of securing a bank loan, international students can consider building a positive credit history by opening a US bank account, obtaining a secured credit card, and making timely payments. Demonstrating responsible financial behavior and establishing a good credit score can enhance eligibility for bank loans. It is also recommended to research and compare loan options from different banks, considering factors such as interest rates, repayment terms, and any additional requirements specific to international students. Consulting with a bank representative or financial advisor can provide valuable guidance throughout the loan application process.

Can Indian students get loans in the USA?

Yes, Indian students studying in the USA can access various loan options to support their education and living expenses. International students, including those from India, can apply for personal loans specifically designed for international students studying in the US. These loans are offered by select lenders who consider factors beyond traditional credit history, such as academic progress and future earning potential.

Indian students may also be eligible for loans through their educational institutions. Some universities and colleges have loan programs tailored for international students, which can provide more favorable terms and conditions compared to other loan options.

Is it possible for an F-1 student to obtain a credit card in the US?

Yes, F-1 students can apply for credit cards in the US as long as the credit card issuer accepts Individual Taxpayer Identification Numbers (ITIN) as a substitute for Social Security numbers. If an international student has an ITIN, they are eligible to apply for credit cards and enjoy the benefits and convenience they provide.