Buying your car in Dubai is possible for most people, mostly due to the easy availability of car loans and financing options. However, it is crucial to understand the requirements and paperwork before you plan to get a car loan in Dubai.
A car loan is one of the most popular modes of payment opts by many buyers in Dubai. Whether you want to buy a brand-new car or looking to finance a used one, it is essential to pick a bank wisely. This guide will explain how to get a car loan in Dubai, what documents are required to get a used car loan in Dubai, and the rules and regulations related to these loans.
Requirements for Getting a Car Loan in Dubai
The following are some important requirements that need to be considered when buying a car in Dubai:
Documents Required
Many banks in the emirate have different criteria for approving an auto loan in Dubai. Here is the list of the following documents that are required to get a car loan in Dubai:
- Original Emirates ID
- Salary certificate/proof of income
- Valid passport/visa
- Driving license
- 3-6 months of bank statements
- Valuation certificate of the car
- Insurance policy documents
- Car’s registration
Expats who are interested in applying for a loan should cross-check the validity of their home country’s driving license in the UAE. If your driving license is invalid, then you need to apply for a UAE driver’s license to become eligible for car financing.
Also, expats are required to provide a home address in their home country no matter how long they have been living in the UAE. The bank may also require a reference from a friend or family member.
Also, it is important to register a used car in Dubai or renew it if needed.
Minimum Salary and Age
A borrower needs to be 21 years old to apply for a loan in Dubai. The minimum salary requirement varies from bank to bank but generally, it must be AED 5,000 or above. Do check with a few banks to see if you fulfil the requirements.
Repayment Tenure
In Dubai, some banks offer a repayment tenure is up to 60 months and for used cars, the maximum tenure depends on how old the car is. However, for older cars, the repayment period can be even shorter. For instance, you may have a repayment term of two years for a 10-year-old model.
Minimum Amount for Car Loans in Dubai
Most banks only finance 80% of the car’s value; however, you need to pay a 20% down payment in advance. In some cases, the bank takes the down payment, while some banks ask to settle the down payment directly to the car owner before the bank finances the 80% amount. Also, some banks specify the minimum car financing amount, which is roughly AED 20,000. Also, to qualify for a loan, the car you are planning to buy must be valued at a minimum of AED 25,000.
Things to Consider Before Acquiring a Car Loan in Dubai
Below are the points that you must consider before getting a car loan in Dubai:
Compare Car Loan Interest Rates
It is important to compare the car loan interest rates in Dubai to acquire the lowest one. The interest rate payable by the buyer is calculated by multiplying the 80% car’s value by the respective interest rate of the concerned bank. Then, multiply the result by the loan term or number of years, which is around 48 months to 60 months.
Term of Loan Repayment
The repayment term of car loan interest rate in Dubai plays a vital role when it comes to monthly instalments. For instance, a longer loan repayment duration requires you to pay more interest to the bank, while if you choose the shorter repayment loan terms, then you must repay more to the bank every month. Therefore, you must check your monthly salary and financial status before you seal any deal.
Keep Up With Repayments
Once you finalise the deal, it is essential to keep up with loan repayments, because if you miss repayments the bank can repossess your vehicle. Besides, you might also become liable for late fees and other charges.
EMI Calculations
Equated Monthly Instalment (EMI) is calculated on the loan tenure and includes the principal amount plus interests paid on an auto loan. The EMI tends to remain fixed for the entire loan period and is usually higher for long tenure and lower for the short-term period. Using a car loan calculator in Dubai can help understand the monthly instalment amount.
Car Loan Calculator in Dubai
To calculate a new or used car, you typically need to consider the following variables of the car loan calculator in Dubai:
- Loan Amount
- Interest Rate
- Loan Tenure
- Down Payment
- Processing Fee
- Insurance and Registration Costs
Based on these factors, a car loan calculator in Dubai can give you an EMI amount. Speaking of that, the formula used to calculate EMI after car loan interest rate in Dubai is the following:
EMI = [P x r x (1+r)^n] / [(1+r)^n – 1]
Here, P is the car loan amount; r is the monthly interest rate (annual interest rate / 12 / 100); and n is the number of monthly instalments.
Most banks offer car loan calculators in Dubai so customers can make informed decisions. The EMI amount can vary according to the bank’s interest rates, processing fees and the loan tenure you chose.
Banks Offering Car Loans in Dubai
Several banks provide car loan offers in Dubai for new and used cars. Moreover, these banks offer green loans for electric and hybrid vehicles. When buying a used car, dubizzle Cars finance and insurance services allow consumers to get the best loan offers easily.
Emirates NBD Bank
Emirates NBD is one of the most popular banks offering car financing in Dubai. Here, the interest rates for auto loan starts from 2.69% p.a, while the first payment deferment is for up to 120 days. In collaboration with dubizzle, ENBD has also launched AUTOSWAP. With the help of AUTOSWAP, car owners looking to sell their vehicles can complete the transactions without settling their existing loans.
Interestingly, ENBD also offers 0% auto cash loans for automotive purchases from their selected partners such as Audi. Besides, they provide Green Auto Loans for electric and hybrid vehicles, contributing to the UAE’s policy for a sustainable future. However, the car loan interest rate starts from 3.75% for the Green Auto Loans.
The borrower must pay a 20% down payment to obtain 80% car financing in Dubai. Do check the terms and conditions mentioned on the Emirates NBD website.
Dubai Islamic Bank
A Car loan in Dubai Islamic Bank requires minimum documentation and easy access to the funds. The bank offers a wide range of financial plans and payment options that can fulfil personal and commercial needs.
Al Islami Auto Finance plan offers financing opportunities for individual and non-individual customers up to AED 1.5 million and AED 5 million respectively. The requirement of minimum salary is AED 3,000. The tenure is flexible and available for both new and used cars. One can use the car loan calculator by Dubai Islamic Bank to find the amount they have to pay per month.
RAK Bank
RAK BANK car loan service ensures hassle-free procedure along with flexible repayment tenure. The car loan interest rate in the RAK BANK starts from 2.85% to 3.55% for salaried customers which requires no salary transfer. Moreover, the bank also offers a repayment period of 60 months with no hidden charges.
Self-employed customers can get a car loan at an interest rate of 2.95% to 4.25% in Dubai. Moreover, a used car loan for EVs is also available at an interest rate of 2.47% for salaried and 2.79% for self-employed customers.
For more information, you can do live chat 24/7 and visit the nearest branch.
Mashreq Bank
Mashreq car loan offers its services at competitive terms that come with added benefits. The interest rates in Mashreq Bank start from 5.99% to 9.99% p.a. flat with flexible repayment options of 12 to 60 months. The maximum cash loan amount you get to borrow from Mashreq Bank is AED 500,000 to get a car of your choice.
The paperwork required for salaried applicants includes an application form, valid passport, Emirates ID, driving license, bank statement of 3 months and salary certificate. On the other hand, self-employed individuals need a trade license copy and power of attorney in addition to the other documents.
There are several other banks offering car financing in Dubai on easy terms and the minimum salary bracket is also the same as the above banks. You can compare the loans by using the car loan calculator in Dubai and choose the most suitable option for an auto loan.
FAQs
What is the minimum age to apply for a car loan in the UAE?
To get an auto loan in Dubai or other emirates, the borrower must be 21 years old to be eligible.
What is the repayment tenure of a car loan in Dubai?
The repayment tenure varies from bank to bank. However, it does not exceed 60 months. Besides, the car loan interest rate in Dubai reduces when the borrower settles the loan earlier.
What should be the minimum salary for applying for a car loan in Dubai?
The minimum salary for applying for an auto loan in Dubai, UAE is AED 5,000, depending on the bank you choose. However, some banks such as Dubai Islamic Bank and Emirates NBD offer new and used car loans at the minimum salary of AED 3,000 and AED 4,000, respectively.
Is it allowed to sell a car on loan in Dubai?
Yes, you can sell a car with the loan in Dubai after settling the loan amount. However, if you find a buyer looking for car financing in Dubai, they can settle the remaining loan amount after buying the car from you.
Can I get 0% interest car loans in Dubai?
Yes. You can get a 0% car loan interest rate in Dubai. Emirates NBD offers automotive purchases in instalments at 0% interest. However, the borrower must repay the instalments in six or twelve months to enjoy a 0% car loan interest rate.
That wraps up the complete details on getting a car loan in Dubai, banks and interest rates. We hope this article will answer all your queries regarding auto loans in Dubai. Whether you buy it with cash or get a loan, it is your choice to buy a used car in Dubai.
However, before you plan to get a car loan in Dubai, always check your finances, and add insurance and repair costs along with payment penalties. Also, the terms of loans play a vital role here. So, carefully read and compare before you finalise the deal. You must use the car loan calculator in Dubai to learn the EMI you will have to pay. If you still have queries, here are some of the most frequently asked questions about car loans in Dubai.
Stay tuned to the UAE’s leading auto blog to get more information on the country’s auto market.
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