• Loan Amounts

In UAE, most lenders offer personal loans with the loan amount as a multiple of the applicant’s salary up to a specific limit. The maximum amount that personal loans offer in the UAE to nationals is typically higher than those offered to expats.

• Tenor

Borrowers need to pay back the loan amount through monthly installments. These installments are computed based on the total repayment period. Usually, personal loans in the UAE are available with a tenure of up to 48 months during which you need to re-pay the amount.

• e Interest Rate

In UAE, personal loan interest rates are calculated monthly and charged on the loan amount. Islamic Banking organizations however charge profit rates on the borrowed amount. UAE nationals get the lowest interest rates for personal loans typically ranging from 3.99% to 34.99%.

• Quick Loans Processing

In UAE, you will enjoy the fast-track application process along with the little documentation for processing the loan.

• Early settlement fee: For paying the entire outstanding loan amount before the scheduled date.

• Complimentary Services

Certain personal loan lenders offer several complimentary benefits such as free personal life insurance, no-fee credit cards, and debit cards, free cheque book and many others.

What is the difference between Flat Rate vs Reducing Rate

When it comes to applying for a loan, there is one important aspect that you need to consider is the interest rate you choose. Commonly, there are two types of interest rates namely- flat rates and reducing rates.

What is a Flat Rate of Interest?

A flat rate of interest is calculated for the entire loan amount applicable throughout the tenure. It is the fixed interest rate that does not consider monthly installments to reduce the principal amount. It increases the effective rate of interest than the initial flat rate.

What is Reducing Interest Rate?

A reducing interest rate is calculated every month on the outstanding loan amount. With every EMI payment, your outstanding loan amount decreases by the principal repayment amount, and the next month, interest will be computed on the reduced amount only. Thus, your EMI’s get reduced every month.

Difference between Flat Interest Rate vs. Reducing Balance Rate

The flat interest rate is calculated on the entire loan amount. However, in reducing rate, the interest rate is calculated every month on the outstanding loan amount.

• The flat interest rate is calculated on the entire loan amount. However, in reducing rate, the interest rate is calculated every month on the outstanding loan amount.
• Fixed rates are usually lower (at the beginning) than the reducing balance rate.
• Calculating the flat rate is easier in comparison to the reducing balance rate.
• Practically, the reducing interest rate is better than the flat interest rate as, the reducing rate costs lower on your loan.

Whether you are looking to finance your child’s education expenses, home improvements, or meeting other major financial expenses, you can fulfill all these financial dreams by getting a personal loan in UAE.

Given below are the eligibility criteria to get a personal loan:

• AUAE national or resident
• Between 21 and 65 years old
• Monthly salary of at least AED 7,500 a month (vary from one bank to another)
• Asalaried employee for at least 6 months
• Having a current account with bank and credit salary to that account

To avail personal loan, you also need to provide the requisite documents (as asked by the lender).

You can get a personal loan both by visiting a branch or online.

• Visit Branch: By visiting the branch, you need to fill out the personal loan application form, attach the required documents and your loan application will be processed.

• Online Mode: If you don’t want to visit a branch, most banks offer the option to get a personal loan online. You only need to visit the respective bank’s website, enter the required details and apply for a loan.

After approval of the loan, you will receive funds directly into your bank account.

What are the applicable charges when I avail myself a Loan

Given below are the fees/charges that are levied while obtaining a personal loan.

• Late Payment Fee

You need to pay your loan EMI’s within the specified time duration. If you fail to make the payment within the pre-determined date, you need to pay the late payment fee.

• Processing Fee

In processing personal loans, lenders have to bear some administrative costs. The fee is levied on the borrower. This fee usually covers the cost related to underwriting and credit checks. However, the charges for availing of a loan may differ from one bank to another.

• Pre-payment Fees

If you want to settle your loan before the end of the pre-specified loan re-payment date, you are required to pay the early settlement fee to the lender.

• Disbursement Fee

It is a fee that you pay to cover the loan processing cost. Before disbursing a loan, banks assess your credit history to ascertain you are a suitable candidate for finance. This fee may differ from one lender to another.

• e Credit Insurance Fee

Some lenders offer credit insurance that helps you cover payments that you missed due to unexpected personal hardship. To provide this cover, lenders charge a fee however you may opt-out from taking credit insurance.

• Loan Cancellation Fee

If you want to cancel your loan after its approval or disbursement, you have to bear the cost of the loan cancellation fee. Some lenders charge you a fixed fee while others levy the interest payment. Upon cancellation of the loan, the processing fee is not refunded.

• Compare Loan Interest Rate

When choosing a personal loan, it’s essential to pick a low-interest rate that costs you low monthly EMI’s. Interest rate is one of the key factors that you should consider before availing of a loan. It is thus important to compare interest rates from different lenders, do your research, and choose a loan that comes with a lower rate of interest.

• Compare Fees & Charges

You require comparing fees/ charges levied by the lender. These are various fees are associated while availing the personal loan including processing fees, late payment fees, loan cancellation fees, prepayment charges, etc. So, you must compare these fees & charges before choosing a loan.

• Check Monthly EMI’s

When it comes to availing of a personal loan, you should check the monthly re-payment amount that you need to pay to the lender. You must assess your ability to how much amount you can pay as EMI’s and then choose a personal loan that fits within your budget.

• Check The Disbursal Time

If you are in urgent need of funds, it becomes quite crucial to check with the lender how much time it will take to process your loan to disburse. In urgent financial requirements, you need to make sure to check the time required for the disbursal of funds.

• Read The Fine Print Carefully

It’s wise to read the offer documents carefully and attentively. Also, make sure to understand the terms & conditions and clear your doubts with the lender before taking a loan.

What key criteria for taking out a personal loan

Following are the eligibility criteria to get a personal loan in UAE.

For Expats

For Salaried

• Minimum salary requirement- Every bank has varying requirements for a specific monthly salary to become eligible.
• The minimum age required is 21 years.
• To be eligible for obtaining a loan, customers need to have a good credit score.
• Proof of employment history like salary slip.

For self-employed

• Minimum salary as required by the bank
• Banks or any other lender may ask for a minimum annual turnover
• Length of the continuous operation of the business
• Having a good credit score

For UAE Nationals

• Minimum monthly income as required by the bank
• Proof of employment such as salary slip
• The minimum age limit is 21 years

Key Factors

• Salary Amount and Salary Transfers

There are varying requirements from different lenders when it comes to showing proof of income. Applicants need to have the latest salary certificate that mentions their monthly salary along with all allowances. Some banks require the applicant to complete six months of service to become eligible for availing a personal loan. Most banks have a minimum salary requirement that can differ from one bank to another.

• Debt Burden Ratio

The debt burden ratio (DBR) is an important criterion that you should know before going to a bank. DBR is the current debt burden as a percentage of an individual’s income. It reflects financial commitments on the borrower’s total earnings. The central bank makes it mandatory that DBR should not exceed 50% of the borrower’s monthly income. Banks tend to check the DBR of the applicant before approving the personal loan.

• Credit Score

A credit score is a key eligibility criterion when it comes to issuing loans. It is assigned by the Etihad Credit Bureau depending on an individual’s financial discipline on a scale of 300 to 900. A poor credit score simply signifies the higher risk of default in the re-payment of debt. So, banks always check the credit score while processing your loan application.

Do’s and Don’ts while taking Personal Loan

Do’s

Check Rate of Interest

As personal loan EMI’s include interest along with the principal amount, you should check the rate of interest and pick a personal loan that has a low interest rate.

Eligibility Criteria & Documents

When approaching a lending institution for getting a personal loan, you should check the eligibility criteria and furnish documents with loan applications as asked by the bank or any financial institution.

Cost of the Loan: Before choosing a personal loan, you must check the cost with a personal loan calculator. It helps you assess your loan repayment capacity and with this, you can make sure that you can easily repay the loan amount.

Don’ts

Ignore Credit Score

The credit score issued by Etihad Credit Bureau reflects your creditworthiness towards repayment of the loan amount. If you are ignoring your credit score and running with a poor credit score, the lender may reject your loan application.

Apply for Loan without Assessing your Requirement

You must compute the required loan amount before taking a personal loan. It helps you avoid borrowing a higher amount that will otherwise pile up on higher monthly financial obligations.