WHY WAIT FOR DREAM CAR WHEN YOU CAN GET BEST CAR LOAN
Get Best Rate for Car Loan
What Is Car Loan In UAE
Purchasing your dream car has now become easier with a car loan. Under a car loan, the vehicle being purchased is put as collateral and the bank or any financial institution will finance the purchase of the car. It’s worth checking with banks or other lenders to pick a better deal.
Banks usually finance up to 80% of the car price and 20% you need to make as a down payment. The loan repayment tenure for new or used Cars is up to a maximum of 60 months. In UAE, both UAE nationals and expatriates can get a car loan.
You need to pay back the loan amount along with applicable interest in fixed installments through the entire loan tenure. If you are not able to repay the loan on time, lender can seize the car.
Also, you need to carry a good credit score which helps you get the loan approved and avail better loan terms.
| Car Loan | Minimum Salary AED | Minimum Amount AED | Flat Rate P.A. | Reducing Rate P.A. | Down Payment |
|---|---|---|---|---|---|
| ADCB Car Loan | 5000 | 1,500,000 | 1.99% | 3.65% | 20% |
| ADCB-Islamic Auto Finance | 5000 | 1,500,000 | 1.99% | 3.65% | 20% |
| ADIB Car Finance | 5000 | 500,000 | 2.99% | 5.25% | 20% |
| Arab Bank Auto Loan | 7000 | 3,000,000 | 2.49% | 4.52% | 20% |
| CBD Tamweel Car Loan | 8,000 | 500,000 | 4.16% | 4.52% | 20% |
| CBI Auto Loan | 5000 | 500,000 | 2.75% | 4.98% | 20% |
| Emirates Islamic Al Islami Auto Finance | 3,000 | 1,500,000 | 2.35% | 4.42% | 20% |
| Emirates Islamic New Auto Finance Salaried | 5000 | 1,500,000 | 1.80% | 3.26% | 20% |
| Emirates NBD New Auto Loan | 5000 | 300,000 | 2.69% | 5.06% | 20% |
| FAB Car Loans for Salaried Individuals | 8000 | 1,500,000 | 2.15% | 4.09% | 20% |
| HSBC New Car Loan | 10,000 | 600,000 | 1.99% | 3.81% | 20% |
| Mashreq Car Loan | 5000 | 500,000 | 3.45% | 6.31% | 20% |
| National Bank of Fujairah Auto Loan | 5000 | 1,000,000 | 2.20% | 4% | 20% |
| RAKBANK Car Loan | 5000 | 500,000 | 1.99% | 3.60% | 20% |
| Sharjah Islamic Bank Car Finance | 5000 | 750,000 | 2.79% | 5.06% | 20% |
| United Arab Bank Auto Loan | 7,500 | 500,000 | 2.99% | 5.38% | 20% |
How Do You Get A Loan In UAE
To get a car loan in UAE, you can apply through following channels:
- Visit branch
- Online Banking
- Direct Sales Team
- 24/7 Contact Centre
Eligibility to Get a Car Loan
- Minimum age of 18 years
- Minimum salary requirement (vary from one lender to another)
- A good valid credit score
What Documents Do | Need In Order To Apply For A Car Loan
Following are the documents that you need to provide while applying for a car loan.
For Salaried Individuals
- e Valid Emirates ID
- Passport copy (UAE visa for expatriates)
- UAE valid driving license copy
- Copy of the last 3 months’ bank statements (a longer period may be required if cheque returns are identified)
- Salary certificate/salary transfer letter for proof of income
- Filled car loan application form
For Self-employed Individuals
- Valid Emirates ID
- Passport copy (UAE visa for expatriates)
- UAE valid driving license copy
- Last 6 months’ personal and business bank statements
- Last 2 years audited financials
- Business/partnership-related documents, ie., trade license copy, passport copies of owners/partners, memorandum/articles of association, and other additional documents.
- Filled car loan application form
Companies
- Trade license
- e Bank statements
- List of authorised signatories (if applicable)
- MOA
What Is The Difference Between Flat Rate Vs Reducing Rate
Interest rate is one of the key aspects that you should consider while choosing a loan. There are two types of interest rates applicable on car loans – Flat Rate and Reducing Interest Rate.
Flat Interest Rate:
The flat rate is fixed for the entire loan repayment period. In this, a fixed rate of interest is applied to the entire loan amount. If you get a car loan of AED 200,000 for five years at 5%, the interest rate will remain fixed at 5% throughout the loan tenure.
Reducing Interest Rate
A reducing rate (reducing balance rate) is an interest rate calculated every month on the remaining loan amount. Every month you pay the loan amount and interest and in the following month, the interest rate will decrease. The interest for your next EMI loan payment will be computed based on the unpaid loan amount.
Which One is Better?
A flat interest rate is usually lower than the reducing rate. However, reducing interest rate costs you lesser than the flat rate method. So, choosing a reducing rate is always a wise option than the fixed rate.
What Are The Applicable Charges When | Avail Myself Of A Loan
Given below is the list of charges that you need to pay while getting a car loan in the UAE.
- Loan Processing Fee: Minimum of AED 500 up to a maximum of AED 2500
- Early Settlement of Loan: 1% of the outstanding loan balance
- Advance Payment of Instalment: 1% of advance payment
The fee / charges specified may differ from one bank to another.
Features & Benefits of Car Loans in UAE
Low-Interest Rate:
Car loan interest rates in UAE are quite low starting at 2%. Most banks come with both fixed and reducing interest rates thus providing customers with more repayment options.
Quick & Easy Processing
Auto loan in UAE is processed very quickly in banks. You don’t need to spend hours and wait for days getting approvals.
Low Minimum Salary Requirement
The minimum monthly salary required in UAE can be as low as AED 5,000 which makes it possible for all working individuals to afford their car. The minimum monthly salary requirement may differ from one lender to another.
Finance Your Car Purchase
To own a car, you can simply get a car loan and that even at low-interest monthly repayment. No need to accumulate savings for buying a car, financing is a better option.
Flexible Repayment options
Most banks offer flexible loan repayment options. It enables customers to choose their repayment strategy, customizing EMI tenure and amount that suits them.
100% Financing
In UAE, banks and other financial institutions finance your car purchase up to 80% of its cost. However, several banks offer up to 100% financing for an auto loan.
Financing for Used Cars
Acar loan in UAE is also available for used cars. Most banks offer finance for used cars depending on the age and condition of the vehicle after doing a thorough inspection.
How Much Can I Borrow
In UAE, banks/ financial institutions usually offer car loans up to 80% of the cost of car purchase. Moreover, up to 100% financing is also available. So, it’s extremely easy to own your dream car.
However, when it comes to taking a loan for purchasing a car, you need to assess your repayment capacity and then choose a loan that fits your budget.
People often get confused as to how much loan amount should they borrow. The value of the car depreciates over time, so taking a bigger loan is not wise. Also, customers should take home loans after properly assessing their re-payment capacity.
Having a bigger EMI will also decrease the eligibility for any other loan. So, consider all these aspects while taking a loan for your car purchase.
Fees And Charges Involved In Car Loan
- Loan Processing Fee (salaried and self-employed individuals): 1% of the vehicle finance amount, subject to a minimum of AED 500 up to a maximum of AED 2500
- LMHV Finance: 1% of the finance amount
- Late Payment Charges for overdue instalment
- Advance payment of instalment: If you make an advance payment of your EMIs before the due date, there is some fee levied.
- Change of due date on standing instructions: If you want to change the due date for EMI payment on your loan, you need to pay the fee for it.
- Early settlement fee: For paying the entire outstanding loan amount before the scheduled date.
- EMI deferment charges (Per Request): For deferment of EMls, you need to pay charges.
The fees and charges may vary from one lender to another.
Do’s And Don’ts While Taking Car Loan
Do’s
- Check your Credit Report
You are advised to check your credit score before applying for a car loan. You must make payments on time for all outstanding dues on loans and credit cards. If you have a poor credit score, a lender may approve your loan application but will charge you a high rate of interest.
- e Read the Fine Print
Before choosing a specific car loan, you need to thoroughly go through the terms and conditions of the loan and then pick a loan that suits your needs and costs lesser as well.
- Get all Your Documents Ready
You need to furnish all the required documents such as income proof, identity proof, address, age, etc to the lender to process your car loan application. So, to obtain a loan for your car purchase, you need to get all these documents ready before applying for the loan.
Don’ts
- Don’t Miscalculate EMI’s
A lower down payment leads to a higher loan amount that will further increase your monthly EMI’s. If already have loans, you must consider whether you can afford another EMI. Also, make sure that your EMI’s don’t eat the amount intended to meet essential expenses.
- Don’t Just Choose the First Loan Offer
When you go to purchase a car, your dealer may offer you financing, but you should not accept it immediately. You must visit other lenders before choosing the right lender basis their offer and service quality.
- Assess Post-purchase Expenses
Don’t just believe the salesman that car maintenance and servicing are affordable. Car companies make estimates for mileage in ideal conditions. Your fuel costs could be higher than what you have planned. There might be some unforeseen expenses such as accidents and the insurance policy may not cover them.