How to Apply for Car Loan in UAE?

By Sakshi Srivastava - 23 Nov 2021 Last Updated: 01 Dec 2021
How to Apply for Car Loan in UAE?

Despite the various advanced ways of public transportation available in UAE, nothing compares to the independence that comes with owning a car. Of course, the form of finance you select to pay for your purchase will determine how quickly you can get your hands on a car. While most individuals prefer the idea of paying cash, most buyers prefer to take out a car loan. A vehicle loan in UAE is your best choice for purchasing your own pair of wheels, whether you are an Emirati or an expat. However, how can one obtain a car loan in UAE? What are the usual rules for getting a car loan in UAE? Is it possible to get a loan for a used car? In this case, how do down payments work? Let's have a look.

In UAE, how do I Apply for a Car Loan?

Depending on the manufacturer and model, a new car in UAE might cost anywhere from a few thousand dollars to millions of dollars. Of course, not everyone has the financial means to make the full sum. You can always apply for a car loan in UAE if you don't have the necessary funds or prefer to put your extra cash towards other bills

But first, you must comprehend how the UAE method works. The 'car loan qualifying requirements' vary depending on your circumstances and financial situation. Whether you're looking for a used vehicle loan in UAE or want to finance a fresh new pair of wheels, there are a few things to think about:

Documents Required for Car Loan in UAE

For auto loans in UAE, banks frequently require applicants to provide documentation such as their passports, Emirates ID cards, and other essentials.

Getting the finest car loan in UAE is more about the loan requirements of the bank or financial institution that will finance it than it is about the type of vehicle you want. Applicants must provide the following documentation to most banks

  1. Passport
  2. Emirates ID
  3. Salary certificate
  4. Laboure card
  5. Driver’s license
  6. Bank statements for the last 3 to 6 months
  7. Insurance policy documents
  8. Valuation certificate of vehicle
  9. Car registration documents

Expats applying for loans must guarantee that their home country's driver's licenses are valid in the UAE. Owners with expired licenses must apply for a UAE driver's license before being accepted for car finance. In addition, to be qualified for a car loan in UAE, you must be at least 21 years old.

Make sure your driver's license from your home country is valid in the UAE before applying for a car loan in UAE.

Minimum Amount for Car Loans in UAE

Most banks have a minimum loan amount that they will support, which is usually about AED 20,000. Also, keep in mind that banks will only finance 80% of the cost of a vehicle. The remaining 20% is used as a down payment. To put it another way, in order to qualify for the loan, the car you want to buy must be worth at least AED 25,000. So, before you apply, be sure you have the finances you need. Look for banks that offer 0 down payment vehicle loans in UAE to specific sorts of consumers as an excellent place to start. For example, a bank in UAE may provide corporate employees or self-employed individuals a car loan with no down payment. For a car loan with no interest.

Loan Tenure

Loans for new or used cars have a maximum repayment period of 60 months. Older used cars, on the other hand, usually have a lower maximum tenure. A 10-year-old model, for example, might have a two-year repayment period. When looking for a car loan for used cars in the emirate, keep these points in mind

Remember to Consider Interest Rates

Comparing interest rates is the best way to find the lowest interest car loan in UAE. The rate of interest paid by buyers throughout the life of the loan is calculated by multiplying the 80 percent value by current interest rates, then multiplying that by the number of years or term of the loan, which is normally about 4 to 5 years.

The repayment conditions of a vehicle loan have a significant impact on the monthly instillments. Shorter repayment terms, for example, demand you to pay the bank more each month. However, the higher the interest rate, the longer the repayment period. So, before you choose a term, make sure to think about your financial situation. It is the most cost-effective method of obtaining a car loan in UAE.

For the finest auto loan rates in UAE, consult your chosen dealership or internet resources and compare current interest rates.

Keep in mind that missing payments can result in your automobile being repossessed, leaving you responsible for any fines and late fees.

In rare circumstances, vehicle showrooms and dealerships offer bank representative consultations. Customers may compare vehicle loan rates in UAE in an easy way. If your dealership does not provide this service, you may still look up current interest rates online. It's the most accurate method for calculating the interest rate on a car loan in UAE.

Advantages of Car Loan in UAE

If you're still unsure whether a car loan in UAE is the right solution for you, consider the following advantages:

  • You don't have to put up any collateral to get a vehicle loan. This is since the car is used as collateral.
  • Car loan repayments might really enhance your credit score if you keep up with payment deadlines.
  • Banks offer flexible payment packages to make it easier for borrowers to finance their loans which gives them full control over how much they spend in monthly instalments.

Unlike home loans, car loan amounts can be negotiated with lenders provided

Conclusion

For permanent residents or expats working in the emirate, a car loan in UAE is the best option. Tourists and temporary visitors who aren't planning on staying for more than a year should rent or lease a vehicle, because each has its own set of advantages. Consider leased cars: in addition to maintenance and gasoline costs, lease agreements often include monthly or yearly payment schedules rather than down payments.

That completes the list of prerequisites for obtaining a car loan in UAE. Keep this advice in mind the next time you're looking for a car loan in the UAE. To learn more about the process connect to our experts at Dhanguard or visit our websites.

Getting car loan is made simple and hassle-free with Dhanguard Vehicle Finance and Car finance service in Dubai, UAE. We provide you auto loan and auto finanace services with the minimum possible trouble including paperwork & payments.

By Sakshi Srivastava

23-Nov, 2021

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