The independence of owning your own set of wheels is something people cannot abstain from. Although Dubai offers several advanced modes of transport, Emiratis and expats cannot shake the feeling of calling themselves a proud owner of a car.
With that said, most buyers prefer a car loan as a mode of payment. But, how to get a car loan in Dubai? Hopefully, by the end you’ll know everything you need to know. The application process to apply for car loans Dubai, documents required, eligibility criteria, and more are discussed below.
When you apply for a car loan, and it gets approved, your car is mortgaged to the bank until you settle the loan.
- you will have to contact the bank. However, many car dealerships are affiliated with the bank to offer you a smooth and easy loan for your new car.
- If your car dealership offers this service, it becomes convenient to compare loan rates and other details. But, you can always compare loan rates at online resources.
- Based on the type of car, used or brand new, and other things such as models, your finance, and more, banks have different loan structures.
But, there are some basic things you need to consider before applying for a car loan with any institution in Dubai as stated below.
Although document and other loan application details differ, here are the important documents you are required to produce for a car loan.
- Emirates ID
- Salary certificate
- Labor card
- Driver’s license
- Bank statements for the last 3 to 6 months
- Insurance policy documents
- Valuation certificate of vehicle
- Car registration documents
The eligibility criteria is a lot similar for both expats and locals, the only difference is driving license.
- First and foremost, you should be at least 21 years of age to apply for a car loan in Dubai.
- A valid driver’s license
- A salary of at least 3000 Dirham is required to be eligible for most car loan dealers in UAE.
- Valid documents as requested by the bank
How does Auto Finance work in Dubai?
There are different ways to finance your car in Dubai, it varies based on factors such as whether you are a local or an Expat, how long you wish to stay in Dubai, savings, type of ownership, and used or new car.
But, first, let’s discuss car loan considerations in Dubai.
- Most banks specify the amount they are ready to invest which is 80% of the total purchase amount and 20% is attributed to down payment. It is better to accumulate your down payment funds in advance. Another important thing to note is that the car you intend to purchase must be around AED 25k out of which banks are willing to invest 20k. The rest is down payment. To learn more, check out our article on how to get a car loan in the UAE without a downpayment.
- Nevertheless, some UAE banks offer zero down payment options for a specific type of customer such as a business employee or self employed individual. Apart from that, you can get suggestions from your car dealer.
- You need to produce valid documents such as salary certificate, bank statements from the last 3-6 months, Emirates ID, and a driver’s license. If you are an Expat, you should have a valid driver’s license, or you can apply for a new driver’s license in Dubai if there’s an issue with your original license. Car’s registration certificate, insurance policy documents, and valuation certificate are also required for a loan application.
- The loan period for older cars is generally shorter due to less purchase amount. But, banks offer a maximum loan period of 60 months for both old and new cars.
Paying cash is always the best option to finance your car if you are ready with your funds. Besides cash or loan, you can also opt for a lease agreement if you want to stay for a year or so. Renting or leasing vehicles come with their own set of benefits. Instead of down payments, lease agreements feature yearly or monthly payments, gasoline charges, and maintenance costs.
Repaying Methods of Loan
As mentioned earlier,
- The Banks in Dubai structure car loans with a repayment tenure of 60 months.
- The used cars have shorter repayment tenure, say, a ten year old model will have a repayment term of two years at best.
- Interest rates are the most important thing to consider before financing your car with a loan. Loans with shorter repayment terms demand a higher repayment amount every month. However, long repayment terms come with less amount to pay.
Thus, compare the best interest rates offered by different banks and go with the cheapest car loan option in Dubai.
If you’re interested to read more about How to Get a Home Loan in Dubai, click to read the best review.