Everything You Need to Know About Remittance Loans in the U.S.

If you are an immigrant living in the U.S. who needs to send a certain amount of money back to your native country to clear a pending debt, to support your family financially, or for any reason whatsoever, a remittance loan can help you do that.

What Is Remittance?

In simple terms, remittance can be explained as the amount of money a person sends back to his native country after living, working, and earning it in a foreign land. For example, when an IT professional living in the U.S. sends money back to India, then it is considered a remittance.

Studies have shown that remittance is one of the major sources of income for many countries. Remittances play a big role in Nepal’s economy—25% of its national GDP came from remittance in 2014.

India and China are the two countries which receive the highest remittance every year. Out of $543 billion that left the United States, $436 billion of remittance was transferred to developing countries. India and China received $60 billion and $70 billion respectively between 2013 and 2015.

Using a Remittance Loan to Pay Off Debt Back Home

A lot of professionals working in foreign lands are now relying on remittance loans for settling their debts back home.

Why people take remittance loans?

A lot of professionals are opting for remittance loans because they want to settle the debt they accumulated for their education back home. Some people want to pull their families out of poverty, hence they might obtain a remittance loan.

Benefits of remittance loans:

• It is dependent upon the amount of money you earn in a foreign country.
• The loan amount also depends on visa access. Your loan must be repaid before your visa expires.
• The loan amount can vary according to your profession.
• Your native country will also affect the amount of the remittance loan you can acquire.
• You need to provide complete documentation including passport, salary, appointment letter, and approval letter from your company.

Getting the Money There

Once your remittance loan is sanctioned, you can transfer it to your native country and get rid of the debt you have accumulated in the past or send money to loved ones. Let’s go through the varied steps involved and understand how the remittance gets transferred to your native country:

A usual remittance occurs in three steps:

Step 1: You (the sender) will use your checking, savings, or loan account to send money to the agent who is responsible for sending money to your country.

Step 2: The agent responsible for the transfer of remittance will alert their agents in your native country and will request that they be ready to process the transaction.

Step 3: The agent in your country, also known as the paying agent, will pay the remittance amount to your family or whoever you’re sending the money to.

A currency conversion cost is charged by the government, bank, or other foreign exchange agency in your country. These currency conversion charges are deducted from the amount you have sent as remittance. For example, if you have sent 1,000 USD to India, which generally converts into 72,000 INR, the conversion agency might charge something between 1-2% of that total.

Why Big U.S. Banks Don’t Lend to Immigrants

The United States of America houses some of the best universities to study and companies to work, hence millions of people from around the world migrate to this country in search of a better future.

While education and job opportunities are great, the cost of living is even higher. One might need to either take up extra part-time work to afford to live in one of the top cities or simply rely on a loan from a local bank.

Local banks are not very fond of lending remittance loans to immigrants in the U.S. and here’s why:

Immigrants Do Not Have a Credit History

Having a credit history makes it easier for banks to identify your loan repayment history, which assures them whether you will be able to pay off the loan or not. However, immigrants often do not have a proper credit history which makes it tough for them to get a remittance loan.

Immigrants Can Leave for Their Native Country Any Time

No matter how long an immigrant’s visa allows them to stay in the U.S., they can leave anytime. This is a matter of great concern for banks in the U.S.

Immigrants Do Not Always Have the Requisite Paperwork

Since they were not born here, they didn’t take their driving test here, and more often than not, they do not have their social security number either. The lack of all these important details makes it tough for the banks to provide them with a loan.

Getting a Remittance Loan With Stilt

If you are an immigrant looking for a remittance loan in the U.S., Stilt has got your back. Stilt provides loans for immigrants and the underserved when other lenders won’t.

Irrespective of whether you have a social security number and a co-signer or not, Stilt can help you in securing a loan at relatively low interest rates with no prepayment fees.

The entire process is simple too. All you need to do is submit your application. Stilt values your time and gets back to you with an update within 24 hours. Next, once your documents are verified, a promissory note is sent for you to sign.

Once you have signed, the loan disbursal is initiated within 2-3 days. And you’re done!

Conclusion

Undoubtedly, sending remittance to your native country is not as easy as it seems. For emergency situations when you need quick access to cash, a remittance loan could prove to be of great help in plenty of situations.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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