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Guide About Car Loan in Dubai

car loan dubai
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Dubai city offers a luxury lifestyle and for that purpose, having a car is a key factor. Car loans in Dubai have made it much easier to get a car in Dubai. As Dubai is a major hub for both local and international residents, you can get a variety of car loan options. Understanding the car loans and its criteria will surely make it easy for everyone. So, let’s start our journey of getting a car loan in Dubai.

Importance

Getting the best auto loan for you actually means long term health to your finances. Dubai car loan interest rates and repayment options also offer a competitive environment among lenders. So, you can discover the best terms, interest rates, and payment schedules ideal for your needs. It will prepare you to steer clear of some common pitfalls. Moreover, increase your savings on costs, and overall help get the most out of owning a car.

What is a Car Loan?

Car loans are a form of credit that enables individuals to purchase a car by borrowing money. It can be from an institution, namely a bank, finance company or specialized car loan provider. The financial amount borrowed for the loan is repaid in a specific time period.

There are two types of car loans

Secured Loans

These loans use the car itself as collateral. In case of borrower default, he/she has the right to repossess the car.

Unsecured Loans

Also known as personal loans, these loans are not collateralized. So, approval is based entirely on your personal credit score and financial situation.

Types of Car Loans in Dubai

New Car Loans

Specific to new cars. New car loans are ideally suited for financing the purchase of a brand-new vehicle. These loans are often offered with competitive levels of interest and permitting flexible repayment schedules. So, it is the choice for many people seeking to purchase current models.

Used Car Loans

With Used car loans, the people who opt for a second-hand automobile can apply for their loan. Although interest rates may be higher than with new car loans.

Islamic Car Loans

However, Islamic car loans (Shariah compliant car financing) are arranged to meet with the tenets of Islamic finance. The loans are often structured as leases-to-own or profit-sharing agreements. Rather than interest-bearing debt.

Key Factors to Consider

Interest Rates

Flat vs. Reducing Rates

There are basically 2 types of Interest rate structures for car loans in Dubai.

Flat Rate

Interest is calculated on the original loan amount with this type of arrangement. Hence, lending itself to be a fixed rate for the duration of repayment. Therefore, you will have monthly fixed installments.

Reducing Rates

The reducing rate of interest comprises a portion of principal. Interest varies across EMI (equated monthly installments) payments. But the interest component gradually decreases with each payment. This translates into lower monthly payments down the road.

Determine whether flat rates or reducing rates work best according to your comfort with the payable amount. Flat rates offer guaranteed payments. But reducing rates mean less interest paid in total for the life of the loan.

Types of Interest Rates in Dubai

car dubai

Average current market interest rates for a car loan in Dubai is approximately 2.69% p.a. to 5% p.a. It depends on the lender and vehicle type.

Repayment Terms

Standard Repayment Periods

In Dubai, the car loan duration is available from 12 months to 60 months (5 Years). But the most favorite duration in which you repay your Car Loan in Dubai is 12-48 months.

Early Settlement Fees

Banks in Dubai charge you an early settlement fee if you opt to pay off your car loan prior to the term contract finished. Typically, this fee is based on the outstanding loan balance. It can increase the cost of the loan.

Eligibility Criteria

Minimum Salary Requirements

Dubai residents need to earn from AED 5, 000 per month upto AED 25, 000 minimum / month. It is based on the lender being eligible for a Dubai car loan.

Documentation Needed

Some of the documents that are generally needed when applying for a car loan in Dubai include the following:

  • Original Emirates ID
  • Valid passport and visa
  • Proof of Salary
  • 3-6 months of bank statements
  • Driving license
  • The car valuation certificate
  • Insurance policy documents
  • Car registration

Car Loan Calculator in Dubai

The most important feature of a car loan calculator in Dubai is to help you determine your monthly payment. Calculate the Equated Monthly Installment (EMI) before you apply for a car loan. Here are the components to determine your EMI:

Principal: The initial sum that has been borrowed on the car

Interest Rate: APR of the loan

Repayment Tenure: The tenure of the loan to be repaid

Down Payment: The initial upfront payment paid.

Processing Fees: The bank charges some fees for processing the loan.

Insurance and Registration Fees: These are secondary costs related to the car.

Based on these factors, the car loan calculator in Dubai provides an EMI amount using the formula:

EMI=P×r×(1+r) n / (1+r) n–1

where P is the loan amount, r is the monthly interest rate (annual interest rate / 12 / 100). n is the number of installments.

Car loan calculator is provided by most Dubai banks to offer financial insights. Customers may consider before making a purchase decision. This EMI amount may change depending on the interest rates of the bank and processing fees.

Banks That Offer Car Loans in Dubai

banks dubai

Emirates NBD Bank

Popular for car financing in Dubai is Emirates NBD with interest rates starting from 2.69% p.a. You have the deferral of the first payment option for up to 120 days. In addition, they offer 0% auto cash loans with partners such as Audi and Green Auto Loans for electric and hybrid vehicles. The financing was 80%, meaning that a 20% down payment is paid.

Contact: +971 600 54 0040

Download the ENBD android app and iOS app

Dubai Islamic Bank

Thanks to Dubai Islamic Bank for making car loans simple with very few documents. There is AED 1.5 million financing for individual people. While AED 5 million for non-individual customers through the Al Islami Auto Finance plan. Minimum salary required is AED 3,000. Flexible tenures are available for both new and used cars.

For More Details Call: +971 4 609 2222 | 111-786-342

Download DIB App: Android | iOS

RAKBANK

Personal loans from RAKBANK come with competitive interest rates. While their car loans can be availed at attractive interest rates and repayment tenures. Salaried without salary transfer has an interest rate between 2.85% and 3.55%. Loans for self-employed customers have interest rates from 2.95% to 4.25%. Used electric vehicles are available at special prices.

Contact: +9714 2130000

Get the RAKBANK App Android and iOS

Mashreq Bank

Mashreq Bank provides the best car loans in the UAE with attractive interest rates 5.99%-9.99% p.a. It offers flat and quick repayment terms of 12-60 months. The loan to be offered is of up to AED 500,000. If you are a salary person, you should have an application form and important documents. For self-employed, a copy of the trade license and power of attorney is required.

Contact: +9714 4244444

Check Availability Download Mashreq App: Android iOS

Loan Calculator in Other Cities of UAE

The loan calculator for the car is also available at other significant cities across UAE. It includes Abu Dhabi, Sharjah, and Ras Al Khaimah. Abu Dhabi car loan calculators can assist residents and visitors in financing the luxury car(s) of their dreams. Sharjah tools are designed for the straddles of modernity and tradition. Calculators for car loans made by Ras Al Khaimah can also be found. These calculators provide you the ease of taking such a decision no matter in which emirate you are.

Comparative Analysis

Interest Rates Comparison

Here is a table comparing the typical flat and reducing interest rates for car loans in Dubai:

Loan Type Flat Rate Reducing Rate
New Car Loan 3.99% – 5.00% p.a. 2.69% – 4.50% p.a.
Used Car Loan 4.49% – 5.50% p.a. 3.19% – 5.00% p.a.
Islamic Car Loan 4.25% – 5.25% p.a. 3.00% – 4.75% p.a.

While the reducing rates tend to be lower over the span of a loan with flat rates. As your monthly payment never really changes.

Additional Benefits

A few Dubai-based lenders offer enhanced benefits with their car loan product that includes:

  • Car insurance bundles
  • Loyalty/rewards programs (e.g., cashback, airline miles)
  • Promotion of the day (e.g., for UAE nationals, government employees).
  • Flexible repayments (e.g., Payment holidays Discount for early settlement)

Car Loan Calculators

This is the point where car loan calculators are most helpful. Thus, providing you with an idea of how much your monthly payments might be. Or how much interest you may overpay in the long run, and help you compare different lender options. Generally, you just have to input variables like loan amount, interest rate or repayment term. The homepage of such a calculator will show you what your finances would be like.

Loan Comparison Websites

Dubai-based websites like MyMoneySouq and Policy Bazaar offer car loan comparison services. This is because these aggregators let you enter in your details. Then compare quotes from various lenders all at once. Thus, enabling you to easily select the right car loan for you.

Car loan Application Process

car loan dubai guide

How to get a car loan in Dubai?

Select a Bank

Choose a bank that provides car loans in Dubai. Emirates NBD, Mashreq and Commercial Bank of Dubai (CBD) are some examples of the popular choices.

Verify if you can Apply

Most likely you have following options for car loan eligibility:

  • Age: 21 years or older
  • Nationality: UAE National or expatriate
  • Minimum Salary: AED 5,000 to AED 8,000 per month (Varies from bank to another)

Collect documentation

Have your intended collection of files ready for implementation.

How to Apply Online or In-Person

You have the option of applying for a car loan through their website, or in-person at your local branch.

Apply

Complete application and Upload Documents.

Approval

You will receive the bank’s approval if they approve. It will set out the amount, interest rate and repayment date of your loan.

Loan disbursal

After you accept the loan offer, the bank disburses the loan amount to the car dealership or seller.

Repayment

You will make monthly payments according to the repayment schedule you have agreed with the bank.

Tips for Securing the Best Car Loan

tips car loan

Here are some tips to help you get the best car loan interest rates possible:

Find Out Your Credit Score

Your credit score will be one of the biggest determining factors in your ability to buy a home. This will enable you to obtain lower interest rates.

Compare Rates

Be sure to research across multiple lenders to secure the best rates. The rates may be compared by online tools.

Get Pre-Approved

Before you step foot into a dealership, apply for your loan pre-approval. It allows you to bargain and avoid higher interest rates.

Understanding Loan Terms

Essential terms to consider when assessing vehicle loans:

Processing Fees

It is a fixed amount charged by the lender for processing the loan. Make sure you know the fees and how they will be affecting your loan.

Prepayment Penalties

Certain loans have penalties if the loan is paid off before it reaches its scheduled maturity date. Know what these fees are before you sign the agreement.

Managing Monthly Payments

monthly plan dubai

To help have a better control over your monthly payments:

Make a budget repayment

Plan your monthly repayments to assure you will be able to afford the payments for each month. Look at the total cost of the loan, including interest and fees.

More Payments

If you can then make additional payments to pay down the loan quicker. This will reduce overall interest paid.

Conclusion

Getting the best car loan requires thorough planning and research. Ensure you know your credit score, compare rates and can afford to pay the monthly payments for the best possible deal.

FAQs

Lenders offer up to 80% to 90% of the showroom cost of the car.
Loan amount is different for each car because of the cost and type of vehicle, its value in the second-hand market.
Most lenders take between 3-7 days for processing.
Interest rates are to be had and naturally the better a client you are (or look like) the decrease your quote.
Most car loans have a repayment period of one to five years. Although, some lenders offer up to seven years.
If you do have a bad credit score, or other financial problems. Then your loan application could be denied.
Repayment of the loan can be done through either post-dated cheque (PDC). Or electronic clearing systems and prepayment is allowed after a specific duration.
A soft credit is just an estimated credit search. Whereas a hard credit report search is a complete credit scores check that can impact your debt rating.
Car finance agreements can be as short as one year and last for up to seven years.
APR stands for annual percentage rate (on a loan).
No, it is possible to get car finance with bad credit.
There is an option to pay a deposit in order to lower your monthly repayment thereafter.
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AED 39 /day
AED 1070 /mo.
AED 49 /day
AED 1350 /mo.
AED 69 /day
AED 1370 /mo.

FAQ's

Frequently Asked Questions

How Much Loans Can I Get?

Lenders offer up to 80% to 90% of the showroom cost of the car.

How much loan amount can I get?

Loan amount is different for each car because of the cost and type of vehicle, its value in the second-hand market.

What is the car loan processing time?

Most lenders take between 3-7 days for processing.

Is It Possible to Negotiate Interest Rates?

Interest rates are to be had and naturally the better a client you are (or look like) the decrease your quote.

What is the tenure for a car loan?

Most car loans have a repayment period of one to five years. Although, some lenders offer up to seven years.

Will my loan application be canceled?

If you do have a bad credit score, or other financial problems. Then your loan application could be denied.

How to pay EMIs? What about prepayment?

Repayment of the loan can be done through either post-dated cheque (PDC). Or electronic clearing systems and prepayment is allowed after a specific duration.

What is the difference between Soft Credit Search vs Hard Credit Search?

A soft credit is just an estimated credit search. Whereas a hard credit report search is a complete credit scores check that can impact your debt rating.

How many years can you get a car on finance for?

Car finance agreements can be as short as one year and last for up to seven years.

What is APR?

APR stands for annual percentage rate (on a loan).

Is it even possible to get car finance with bad credit?

No, it is possible to get car finance with bad credit.

Should I pay a deposit on car finance?

There is an option to pay a deposit in order to lower your monthly repayment thereafter.