Criteria to get a car loan in Dubai

Despite the many advanced modes of public transport in the emirate of Dubai, nothing beats the independence of owning your own vehicle. Of course, how quickly you can acquire a car of your own depends on the type of financing you use to pay for your purchase. And while most people love the concept of paying in cash, a car loan is the more popular mode of payment for most buyers. Whether you are an Emirati or expat, a car loan in Dubai is your best bet to purchase your own set of wheels. But how to get a car loan in Dubai? What are the general car loan rules in Dubai? Can you acquire a loan for used vehicles? How do down payments work in this regard? Let’s find out.

How to Apply for a Car Loan in Dubai?

A new car in Dubai can cost you anywhere from a few thousands to millions depending on the make or model. Of course, not everyone can come up with the payment amount in full. If you don’t have the desired funds or prefer to use the spare cash you have for other expenses, you can always apply for a car loan in Dubai.

But first, you must understand how the process works in the UAE. The ‘auto loan eligibility requirements’ differ according to your situation and financial status. Whether you are on the lookout for a used car loan in Dubai or are looking to finance a brand new set of wheels, here are some details you need to consider:

Documents Required for Car Loan in Dubai

Getting the best car loan in Dubai is less about the type of vehicle you desire and more about the loan requirements of the bank or financial institute that will finance it. Most banks require the following documents from applicants:

• Passport
• Emirates ID
• Salary certificate
• Labour card
• Driver’s license
• Bank statements for the last 3 to 6 months
• Insurance policy documents
• Valuation certificate of vehicle
• Car registration documents

Expats applying for loans must ensure driving licenses from their countries of residence are valid in the UAE. Owners’ licenses that aren’t valid must apply for a UAE driver’s license before they are considered eligible for car financing. Additionally, you need to be at least 21 years of age to be eligible to apply for a car loan in Dubai.

Minimum Amount for Car loans in Dubai

Most banks specify a minimum amount that they are willing to finance — which comes to roughly around AED 20k. Also, keep in mind, banks only agree to finance 80% of a vehicle’s price. The rest of the 20% is the down payment. In other words, the car you intend to purchase must at least be valued at a minimum of AED 25k in order to qualify for the loan. So make sure that you have the necessary funds ready before you apply. A good start is to look for banks that offer 0 down payment for a car loan in Dubai — offered to specific types of customers. For example, a bank may offer a car loan in Dubai without a down payment to business employees or self-employed individuals. For 0 interest on car loans in Dubai, talk to your dealership.

60 Months

Loans for new or used cars have a repayment tenure of a maximum of 60 months. However, older used cars usually have a shorter maximum tenure. For example, a 10-year-old model may have a repayment term of two years. Keep facts like this in mind when you attempt to get a car loan for used cars in the emirate.

Keep Interest Rates in Mind

The best way to acquire the lowest interest car loan in Dubai is to compare interest rates. The rate of interest payable by buyers over an entire term is calculated by multiplying the 80% value by current interest rates, and then multiplying that by the number of years or term of the payment which usually comes to around 4 to 5 years.

The terms of an auto loan repayment have a huge impact on the monthly instalment. For example, shorter repayment terms require you to repay more to the bank every month. However, the longer the repayment term, the more the interest. So, make sure that you consider the status of your finances before you settle for a term. It is the best way to acquire the cheapest car loan in Dubai. You can read more about the benefits of flat vs. reduced interest rates for further clarity.

Also make sure to keep up with repayments as missed payments can lead to your car being repossessed, leaving you liable for any charges and late fees.
In some cases, car showrooms and dealerships provide consultations with bank representatives. It’s a convenient way for customers to compare car loan rates in Dubai. If your dealership doesn’t offer the service, you can always visit online resources to compare current interest rates. It’s the best way to determine the car loan interest rate in Dubai.

Benefits of Car Loan in Dubai

If you are still on the fence about whether a car loan in Dubai is the best option for you, consider the benefits:

• You technically don’t need to put up collateral in order to acquire an auto loan. This is because the car itself serves as collateral.
• Car loan repayments actually help your credit history provided that you stay on top of 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 that they have a good credit history.

A car loan in Dubai is the ideal choice for permanent residents or expats working in the emirate. Tourists or temporary visitors who don’t plan on staying for more than a year are advised to rent or lease vehicles —each of which comes with its own benefits. For example, consider leased cars; besides maintenance costs and gasoline charges, lease agreements typically feature monthly or yearly payment plans instead of down payments.

That’s a wrap of requirements that are essential for acquiring a car loan in Dubai. Keep our tips in mind the next time you want to acquire a loan against a car in the emirate.

Need to have a valid UAE driving license before you can apply for a loan? MyBayut’s guide to getting a driving license in Dubai will help you secure a driving permit. To increase your chances, visit any of our recommendations for best driving schools in Dubai.

Visiting the emirate and need to rent a car instead? Our guide for renting a car in Dubai will help you procure a vehicle that suits your requirements.