Owning a car in Dubai has become inevitable whether you are a UAE resident or an expat. So, to buy a car, paying in cash may seem like the best option but many people who work in the UAE choose to finance their vehicle with an auto loan. Hence, obtaining a car loan is the most popular method of financing in Dubai, whether you are looking for a brand-new or used car.
However, acquiring reasonable financing is intricate and needs a detailed understanding of the car loans in Dubai. Therefore, read this extensive blog to be well-informed about how to get a car loan and what documents and key points to consider when securing a car loan successfully.
Criteria to Apply For a Car Loan
First and foremost, you have to understand if you fit the criteria before acquiring a car loan in Dubai. There are some rules and regulations that you should be aware of. Also, the eligibility criteria differs based on your financial situation.
So, let’s discuss what eligibility requirements and documents you need to apply for a car loan in Dubai banks.
Eligibility Requirements
The minimum age to apply for a car loan in the UAE is 21 years and above. Additionally, to qualify for a loan, it is necessary to have a minimum salary of AED 5000 with 3 to 6 months of bank statements. However, the minimum salary requirement differs from bank to bank. Also, be sure to have healthy finances to maintain continuous repayments on time, or it will affect your credit history.
Documents Required
Multiple banks in the UAE have slightly different criteria for car loan applications. The following documents are needed when applying for a car loan.
- Emirate ID
- Valid passport
- Resident visa
- Salary certificate
- Driving license
- 3-6 months of bank statements
- Car valuation certificate
- Car insurance copy
- Car registration card
Furthermore, the expats who are applying for car loans should double-check the validity of their driving license whether their home country is one of the approved countries in the UAE. Otherwise, they will have to apply for a UAE driving license to become eligible for a car loan in Dubai.
Things to Know Before Applying for a Car Loan
The following terms and conditions are necessary to know before applying for a car loan in Dubai.
Loan Payment Tenure
In Dubai, the maximum tenure for loan repayment is about sixty months. But, the loan period can also depend on how old the car is. For instance, If the pre-owned vehicle is ten years old, then its tenure will be shorter by up to thirty months, and you may have to repay the total amount by the end of two years.
Interest Rates
Interest rates are generally 2 to 4% of the total car loan amount in Dubai. The interest rate is comparatively lower in Dubai than in other states. Even so, research interest rates from different banks and apply for a car loan where it is the lowest, as the interest rate is calculated by the loan type and duration of the loan term.
Down Payment
Dubai banks usually finance up to 80% of the car’s value, and you are supposed to pay a 20% down payment in advance. Additionally, most of the banks specify the minimum amount for financing, which is around AED 20,000. And to qualify for a loan, the car you are planning to buy must be worth at least AED 25,000.
EMI Calculations
Equated Monthly Instalments (EMI) is a calculation of the loan tenure and the interest
rate to be paid monthly. It remains constant throughout the loan tenure. However, it is usually calculated as higher for longer tenure with more interest rate and lower for a short period. For example, if your monthly salary is 20,000, then your car loan will not be more than half of your monthly income.
Fill out the Car Loan Application
Once you meet all the car loan requirements, you should physically visit the bank and fill out the car loan application provided by the said bank. Further, you will fulfill all the formalities required by the car dealer and bank to close the deal. Additionally, you are supposed to pay a 1% processing fee and provide insurance for a car loan. After all the documents are approved, you will pay the down payment to the bank and will get the car loan process completed successfully.
Banks to Apply for a Car Loan
Multiple banks offer car loans for both used and brand-new cars. Each bank offers different interest rates and simple procedures to secure car loans effortlessly.
- Emirates NBD Bank
- Dubai Islamic Bank
- Commercial Bank of Dubai
- Mashreq Bank
- RAK Bank
In Conclusion, you can successfully obtain a car loan if you understand the intricacies of the required documents, eligibility criteria, and repayment processes. A car loan is the best option you can opt for if you want to have your desired car at a low-interest rate and move freely in Dubai.
