Personal Loans in UAE

A personal loan is an important financial product provided by banks and financial institutions. It fulfils the financial needs of the individual like emergency cash, to travel, house repair expenses, wedding expenses, medical expenses, etc. The personal loan in the UAE is offered at fixed rate or reducing rate. Both expats and UAE nationals are eligible. The loan amount and interest rate depends on the applicant's profile and the bank. You can find the best personal loan in the UAE at competitive interest rates and good benefits. There are personal loans that are offered on NO salary transfer, if the company is not listed and several other benefits. You can also use the personal loan calculator to the find the monthly payments on your loan.

How to Apply for a Personal Loan in UAE?

Applying for a Personal Loan in UAE is a simple process if you have all the documents ready.

• Decide the amount you need to borrow
• Find the best bank in uae for personal loan
• Check the eligibility requirement of a bank along with the interest rate, fees and benefits added
• Visit the bank website to apply online or visit the nearest branch to apply offline

While applying for a personal loan, ensure you have a good credit score and you meet the eligibility criteria for the personal loan product at any bank.

Eligibility for Personal Loan in UAE

Every bank has its own eligibility criteria which needs to be checked individually. However, some basic requirements are as follows:

• Only UAE residents are eligible.
• Loan applicant must be at least 21 years of age.
• Both Salaried and Self employed individuals are eligible.
• Salaried individuals must be currently employed and working for around one-to-six months minimum (varies from bank to bank).
• Minimum salary must be around AED 3,000 (again each bank has its own minimum requirement).
• You must pay back the bank loan before you turn 65 years (for expatriates) and 60 years (for UAE Nationals).
• At most of the banks, employment company must be listed with them.
• Salary transfer criterion depends on the bank and loan type.

Documents required for Personal Loan in UAE

Like eligibility, documentations can also vary from bank to bank. Some basic documents needed are:

Tips to get your personal finance in UAE approved

A personal loan is recommended only to fulfill emergency financial needs. So when you apply for one, it is important to make sure it gets approved without any complications. Banks approve the personal loan quickly if the applicant fits into their eligibility criteria perfectly and all the documents provided are valid. Check these tips to get your personal loan approved

• Have a good credit score
• Check whether your previous loan records are fair enough.
• Make sure you meet the eligibility criteria of the loan.
• Fill in the personal loan application form without any errors.
• Have a stable job i.e you must be working in your current organization for more than a year.
• Avoid applying at various banks at the same time.
• Have all the required documents ready without missing out on anything.
• Don’t apply for a loan amount beyond your capability or requirement.
• Check and make sure your debt to burden ratio (DBR) is less than 50%.
• Ensure you have not got any other loan in the past 6 months as this will increase your DBR.

Personal Loan application rejection

There can be multiple reasons and it can help if you spend time understanding the eligibility requirement before applying for a bank loan. Some common reasons are:

• Salary requirement not met.
• The company you work for is not listed with the bank.
• You have a low credit score.
• Incorrect or incomplete personal information provided.
• Your Debt-to-Burden Ratio (DBR) is very high. In simple words, the percentage of your income being used to repay all your debts is more than 50%.

Banks don’t usually disclose the reason behind rejection. Following the basic hygiene of submitting a completed and correct application, checking your credit score and eligibility and clearing existing debts can ensure that you maximize the chances of your application being approved.

Benefits of Personal Loan

UAE offers a host of benefits for people availing Personal Finance. Let’s look at a few of them:

• Different options available for salaried and self-employed individuals.
• Many banks in UAE offer free debit cards and credit cards to the personal loan holders.
• Few banks offer payment-free period for the first few months. The instalments start after the end of this grace period.
• Personal loan holders can avail Repayments holiday facility i.e can skip installments payment for 1-2 months.
• You can opt for an insurance cover for your loan to hedge against exigencies.
• Personal loans compliant with the Islamic laws are available with most of the banks in the UAE.
• Top-up options are available in proportion to the increase in salary.
• Takaful coverage is available on Personal loans in UAE which offers financial security in case of disability or death of the individual.

Features of a Personal Loan in UAE

• Both UAE Nationals and Expats can avail personal finance in UAE.
• The maximum finance provided is AED 5 Million.
• The personal loan interest rate in UAE depends on your income and the loan amount. It can start from 3.99% p.a. (reducing) or 2.19% p.a. (fixed) which varies with bank.
• The minimum salary requirement to avail a Personal Finance in UAE is AED 3,000.
• Majority banks provide loan amount based on the applicant’s your gross monthly salary.
• The tenure of the bank loan can stretch up to 48 months (4 years).
• 1% of the approved loan amount is charged as processing fees at most of the banks.
• 1% of the outstanding loan amount is charged as early settlement fees.
• Can settle loan partially on paying partial settlement fees.

How do personal loans work?

The working of Personal Loans is simple. Below are the steps for working of a personal loan.

• Application: Once you have the documents ready for a personal loan, you can get the personal loan application form from the bank and fill it without any errors.
• Processing: Once the documents along with the personal loan application are submitted, banks review all the documents.
• Credit Check: After the documents are verified, the banks will request your credit review from the credit bureau
• Approval: After the credit bureau credit enquiry, your loan application will be approved
• Amount Credit: Once the loan application is approved, the bank will credit the loan amount in the bank account.
• Payments: Once the loan is disbursed, you can pay your loan instalments monthly as per the bank terms.

Why do you need to compare Personal Loans?

Comparison of Personal Loan in UAE is important because,

• No two loans offer the same interest rate. Hence comparing will help you find the best and lowest one
• Can find the loan that offers benefits like ZERO processing fee, Installments Holidays, Free Debit Card, Free Credit Card and much more

Flat and reducing rates?

As shown above, Mr. X will pay only AED 131,899 if he chooses the reducing interest rate option.

Please note that this example is purely for explaining the difference between the interest rates and not an indicator of the market. Choose the interest rate that best suits your needs by talking to a financial advisor.

Use our EMI Calculator to Calculate your Personal Loan Installments.

Fees and Charges on a Personal Loan

Apart from the eligibility criteria, interest rates, personal loan applicants must look into other components as well, like fees and charges on the personal loan. There are few fees and charges levied on a personal loan.

• Processing Fees - The Processing fee/ arrangement fee charged on a personal loan ranges from 1% - 2% of the loan amount at most of the banks in the UAE. Some banks provided a discount on the processing fees.
• Early Settlement Fees - If the personal loan holder clears the loan before the end of the tenure, then an early settlement or pre-settlement fee will be charged. This ranges from 1%-3% of the loan outstanding amount.
• Partial Settlement Fees - The loan holder can some part of the loan amount as in partial settlement and there will be 1% - 3% of the loan settlement amount charged as partial settlement fee. Some of the banks in the UAE provide at least one free partial settlement facility per annum.
• Late Payment Fees - If the personal loan holder does not pay the loan installment before the installment due date, then there will be a late payment fee charged. In the UAE, the minimum late payment fee charged is AED 50.
• Credit Life Insurance Charges - A credit life insurance charge of a minimum of 1% is charged. This is to secure the loan amount if anything happens to the loan holder. This is mandatory at some banks and optional at some.
• Loan Rescheduling Fees - Personal loan holders can reschedule their loan tenure on paying a loan rescheduling fees which starts from AED 250.
• Loan Cancellation Fees - If the loan applicant cancels the loan after approval, there will be a cancellation fee charged which starts at AED 100.
• Liability/ No Liability Letter - Banks offer a liability/no liability letter to their loan holders. A minimum of AED 50 is charged for the liability or No liability letter.

Components to compare while getting a personal loan

There are several banks in the UAE that provide personal loans. So to pick one bank amongst various others requires a good comparison. There are certain components to be compared while getting a personal loan, like

• Interest rates - The first and foremost thing to be compared in different personal loan products is the interest rates. Not all banks provide loans on the same interest rates. Check which bank can offer you a personal loan with low-interest rates comparatively. High-interest rate loans can end you up with paying more than what you have borrowed. So compare interest rates on different loan products.
• Loan tenure - The loan tenure on a personal loan must be compared along with the interest rates. In some cases, a high-interest loan with low tenure can be beneficial or similar to the one with a low-interest rate and longer tenure one. The loan holder must check the tenure and interest rate and calculate the EMI of the personal loan before picking up a product.
• Monthly installment - As said, the personal loan applicant must calculate the loan EMI and check how much he will be going to pay monthly. If he can afford the high monthly payments on a lesser tenure and save money on interest rates, then he can pick the right one.
• Processing fees - The processing fees on personal loan in UAE is a minimum of 1%. Some banks provide a discount on the processing/arrangement fees. It can also be a limited period discount. Loan applicants must compare and pick the one that offers the lowest processing fees.
• Early settlement fees - Not all the banks charge fees for the early settlement of the loan. Find the ones that offer discounts on early settlement fees or provide any free partial settlement facility.
• Additional fees - Compare other fees and charges levied on the loan and apply for the one which is best for you.
• Other perks - Banks also offer perks like a free debit card or credit card on the personal loan or discounts on the fees like pre-payment fees or early settlement fees, etc. These can be an advantage for the applicant. So check if you can get any extra perks from the loan.
• Application process - There are two ways to apply for a personal loan in UAE, either online or visit the bank personally. See which can be beneficial for you to finish the process by applying online and save time or visit the bank for a detailed study and apply.