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Is it Feasible to Take Out a Long Term Loan in the UAE? Read This to get Clarity!

Long Term Loans in the UAE is well known for its flexibility and, of course, the benefits of personal loans. Long Term Loans are currently one of the most popular credit products in the UAE due to their flexibility in terms of loan size and repayment. You can choose any loan amount to meet your needs and make payments whenever it is convenient for you. The loan is normally for 48 months, but this can vary based on the bank's discretion.

Although many lenders give you the option of choosing the length of your loan, you should exercise extreme caution when doing so.The length of your loan has a significant influence on the amount you owe. Various tenures of personal loans may have different consequences for you.

Thus in today’s blog, Dhanguard will extensively discuss the Advantages and Disadvantages of taking out a Long Term Loan in the United Arab Emirates. So without any further ado, let’s learn!

What Does It Mean to Take Out a Long Term Loan?

You can acquire a longer loan term with a long-term personal loan, such as 5-7 years. As a result, it's safe to assume that long term personal finance will last a few years. These personal loans have smaller monthly installments than short-term personal loans. While there are numerous advantages to taking out a long-term personal loan, the drawbacks should never be overlooked. Let us now look at the advantages and disadvantages of Long Term Loans.

Advantages 

The advantages of taking out a Long term Loan in UAE are enumerated below-

Maintaining a Low Monthly Installment

As previously said, the long loan term reduces the installment amount, making it easier for you to repay. You can simply repay the loan without making significant adjustments to your monthly budget. Check the EMI amount using the personal loan EMI calculator before applying for personal finance in the UAE.

Improving a Loan's Eligibility

When you take out a loan for a longer period of time, you can acquire a larger loan amount. Longer loan terms result in lower monthly installments, which makes repayment easier. Lenders evaluate whether you will be able to make loan repayments before they approve any form of loan. Because the odds of failing are lower when the installment amount is modest, lenders can easily grant a large loan amount.

Having Access to Top Up Loans

Top-up loans are one of the advantages of personal loans. Only after a specified period of time has passed since you took out the loan may you apply for a top-up loan. If you have a short-term loan, you may be unable to take advantage of the chance.

Assisting with Credit Score Improvement

Long-term personal finance is the ideal option for you if you want to use a personal loan to improve your credit score. It takes a long time for your credit score to increase significantly. As a result, if you take out a long-term personal loan and pay it back on time, your credit score will improve.

Read More: Savings Account Charges in UAE – What you should be aware of?

Disadvantages

The disadvantages of taking out a Long Term Loan in UAE are enumerated below- 

Having to deal with High-Interest Rates 

The interest on a personal loan is usually computed in a compounded fashion. This means that the longer the term, the higher the interest payment will be. If you pay interest for a longer period of time, you will end up paying a lot more than you originally borrowed.

New Loan Eligibility Is Being Reduced

Your repayment capacity is used to determine if you are eligible for a personal loan. Your chances of being eligible for additional loans will be harmed until you have an existing loan. This is due to the fact that your present loan has a defined repayment schedule. Your entire monthly due amount should not surpass a particular percentage of your net income, according to the lenders (monthly). As a result, a current debt may preclude you from obtaining a larger or new loan.

Entrapment by debt for a longer period of time

This long-term personal loan will keep you in debt for a longer period of time, and you may feel debt-ridden for quite some time. For a longer period of time, you will need to be diligent in your financial duties.

Eligibility Criteria for Long Term Loans in UAE

UAE nationals must meet certain conditions in order to be eligible.

  1. As per bank requirements, a minimum monthly income is required.

  2. Proof of employment with pay slip.

  3. The minimum age requirement is 21.

Documents required

  • A filled out application form

  • A passport photocopy

  • Emirates ID copy

  • Letter of pay transfer/certificate of salary

  • 3 to 6 months of bank statements

Conclusion

In the United Arab Emirates, personal loans are available in both long and short terms. The real amount you will be repaying for borrowing will be determined by the length of the loan. It's critical to choose the right term for your personal loan. As a result, you should only make a decision after considering the advantages and disadvantages of long-term loans. While there are numerous advantages to taking out a personal loan, there are always two sides to a story. As a result, long-term personal loans have considerable drawbacks. Consider your options carefully and make informed decisions!

Thus, we hope this blog provided you with insightful information. For more information on other related aspects, feel free to check out our website as well or get in touch with our experts by visiting our Branch Office.

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Frequently Asked Questions

The bank of UAE provides flexible repayment option that can range from one to four years.

Yes, the application for loan can be rejected if the applicant has not provided the reason for such loan with proper documentation.

No, your application for loan will be rejected if you apply for Multiple Loan.

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