What you need to know about car loans in the UAE

car loan documents with approved stamp on it and a car key

At least 60-70% UAE residents buy their vehicles through car loans. Loans offer a convenient means of buying cars that might be otherwise unaffordable.  Wecashanycar explains the criteria that you need to consider if you are thinking of getting a car loan in the UAE. 

Research on creditors

With so many creditors in the market, it is important to conduct research and get the best loan. This means scouring through the best comparison websites to check out the interest rates and terms and conditions of different creditors before signing up for one. You can also look at the varied offers from car dealerships and get something that will not strain you financially. 

Down payment

Most creditors will require that you pay a down payment before you are given a loan which usually amounts to 20% of the total loan amount. Sometimes car dealerships usually waive the down payment. It is therefore imperative that you save some money upfront so that you can qualify for larger amounts of money.

Credit score requirements

Prior to giving you a loan the bank will investigate your debt history to determine whether or not you can default. Your credit history will thus be examined in detail as this reveals your capability of repaying the loan. You will be required to produce the following documents:-

  1. Emirates ID
  2. Salary certificate
  3. Labour card
  4. Bank statements for at least 3-6 months
  5. A valid driver’s license

Additionally, if you are buying a used car, you will also need a valuation certificate to prove that the car is valued at that price.

The Debt Burden Ratio is the main determinant of whether you will get the loan. This is calculated using the proportion of income that you get versus the amount of money you channel to your debts every month. The higher the debt burden ratio you have, the less likely you will be given the loan because you are considered a credit risk.

How much can you get?

Once your financer determines that you are creditworthy they will use your income to calculate how much you are eligible for. The laws in the UAE require that your instalment payments be less than half of your salary. This means that if your salary is AED 10000 your loan instalments will be limited to less than AED 5000 or less depending on whether you have other financial obligations. 

What are the charges you should expect?

Besides giving you the actual loan, different creditors usually have other charges that come with your car loan. These might include:-

      • The loan processing fees
      • Early settlement fees
      • Instalment deferment charges
      • Releasing of mortgage charges.

It is necessary to check the fine print and inquire about these charges before signing any documents. 

The best time to buy a car on loan in the UAE

When it comes to purchasing a car in the UAE, timing is everything. During holidays and festive seasons such as Ramadan and summer, many car dealerships offer great packages for car buyers. These include special offers on car purchases, insurance packages and lower interest rates. In some cases, there are dealerships who give grace periods of one year before you can start paying for the car. You can take advantage of the discounted prices and various packages to save more money.

Instead of buying a car impromptu, you should take time to prepare yourself and put your finances in order and where need be, increase your eligibility for getting a good loan. You should also do your homework and find out which of the credit facilities are favorable for you. If you need to sell a car that is still on loan, wecashanycar is the best option for instant cash and a hassle free transaction.

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