If your recent move to Dubai has become a financial burden, or if
you’re in need of substantial emergency funds, a personal loan can allow you to
settle in easier, or provide immediate relief. Personal loans are readily
available in Dubai and are usually paid off in monthly installments.
Moreover, they can be used for many purposes. In fact, most expats
apply for personal loans in Dubai to pay for their annual rent or their
children’s school fees. A personal loan can also be used for weddings, home
renovations, and other purposes.
Yet, a personal loan application may seem like a stressful process for
some. Here are some crucial things you must know before getting a personal loan in Dubai.
3 Types of Personal Loans
1. Personal Loans for UAE Nationals
This type of personal loan has highly
favorable terms and conditions, and the eligibility
criteria are flexible. Interest rates are also attractive, and the
documentation process is straightforward and simple.
2. Personal Loans for Expats
The terms and conditions of this type of
personal loan are different from those offered to UAE nationals. Still, the
deals are also attractive, with banks giving flexible terms in terms of the loan amount and repayment period.
3. Personal Loans for Self-Employed Individuals
People who run their own business might
find it too challenging to get a personal loan. This is because their source of
income is not stable. But don’t lose hope since there are banks that can still
offer you good personal loan terms. You need only provide the necessary documentation of your source of income.
2 Types of Interest Rates
1. Flat Rate of Interest
A flat rate of interest on your loan implies
that the sum payable and the interest
are calculated at the beginning of the repayment. And this will remain that
way until you have fully paid the money you borrowed.
2. Reducing Rate of Interest
A reducing rate of interest works by decreasing the principal loan
amount after every installment. The constant interest percentage is reduced
every month, resulting in different monthly installments.
5 Factors that Affect the Success of Your Application
Banks offer different maximum loan amounts, minimum salary
requirements, early settlement fees, interest rates, and other requirements. So
you need to compare their personal loan
features and choose one that best meets your specific needs.
The success of your application will depend on the following factors so
you need to consider each point prior to filling in the application form.
1. Minimum Salary
Every bank will set its own minimum
salary requirements. This means that those with higher salaries will be offered
more opportunities to get a loan. Though people with low salaries can be given
a personal loan, bear in mind that the Central Bank of UAE
Regulations state that repayment amounts of your total credit must
not exceed half of your monthly salary.
2. Listed Employer
There are some banks that will turn down your
personal loan application if your employer is not included on their
pre-approved employer list.
3. Salary Transfer to the Same Bank
Most Dubai banks make it mandatory for applicants to have an account
with the same bank. You may be offered better rates if you have a salary
transfer account because you will be seen as a low risk customer.
4. Period of Employment
You will get a better chance of getting a
personal loan if you have long been working with your employer. Leading local bank branches, for instance, favor clients
who have proof that they’re in a stable, permanent job.
It is also easier for employed
individuals to get a personal loan than those who are self-employed. As a
salaried expat, you will be offered more options.
5. Credit History
If you do not have any existing debts,
your loan application will most likely be approved. But if you have lots of
debt and you have missed repayments on your credit card or other loans, you may
not be able to take out a personal loan.
So you should take care of your credit
history. Pay your monthly installments
as early as you can – even a one day delay of payment can ruin your credit
record.
General Requirements for Both Expatriates and UAE Nationals
Most banks in Dubai require applicants to:
●
Be 21 years old or older, but should not be over 60 years old for UAE
nationals and 65 for expats
●
Be earning a minimum of AED 3,000 although some banks prefer a minimum
salary of AED 15,000
●
Have one to six months length of service
●
Have a salary transfer account
Required Documents
The documents you must submit for a successful application may vary from one bank to another. In general, though, here are the documents you might
want to have on you:
●
A fully completed loan application form
●
Means of identification that includes your Emirates ID, passport copy and/or visa copy
●
Copy of your valid passport with a valid UAE residence visa for expats
●
Bank statement for the past three to six months
●
A trade license for self-employed individuals
●
A salary certificate, payslip (last three months) or a salary transfer
letter for salaried e mployees
With the loan services readily available in various financial
institutions and advancements in technology, applying for a personal loan has
definitely become exceptionally easy. And with the above need-to-know
information, it’s even easier and more stress-free. Good luck!
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