Expats working in UAE consider applying for personal loans throughEmirates NBD which offers the lowest income requirement for expats, 5000 AED of any bank in our review.This loan comes up with an exclusive loan return option.
Summary of Emirates NBD Personal loan Features
–£ Minimum salary requirement is 5000 AED.
–£ Great for Free bank account with no minimum balance required.
–£ Emirates NBD provides loan deferment option(can skip two non consecutive installments).
–£ Processing Fee is 1% of the loan amount.
–£ An Insurance Fee is charged on the Loan Amount.
–£ Insurance normally comes up with a double credit life coverage.
In the case of personal loans for the self-employed, banks will ask for a minimum turnover or will check the average balance in your account for the last 6 to 12 months. Another factor is the length of your business. You will also need additional documents like:
Memorandum of association
Power of attorney of expat, clearly indicating borrowing clause (for the sole proprietor)
Tips for Seeking Personal Loans in UAE
Obtaining a personal loan may seem like a tedious process featuring many potential pitfalls. Banks are experts in disguising harmful terms in fine print. Here are some tips for helping you secure the right loan:
The first step is to shop around at various banks for the ideal interest rate and loan.
Often, your regular bank will not offer you good terms as they are interested in selling expensive products to their current client base.
Hence, by shopping around, you can gain the upper hand in finding the cheapest loan in the market.
Watch out for interest rate
There are two kinds of interest rates offered by UAE banks. These are flat-rate and reducing rate.
A flat interest rate implies that the amount of interest paid is fixed at the time of issuing the loan.
It does not reduce with the passage of time. This is an unconventional method used by banks to make interest rate seem lower than the reality.
With reducing interest rates, the amount of interest gets reduced every month, based on principal repaid.
Compare and review terms and conditions
The terms and conditions of the personal loan are as crucial as the interest rate. Certain terms and conditions include hidden penalties and fees. So compare personal loans before applying.
It is also vital to note the terms at which the loan can be repaid early.
It is a fact that most bank customers for personal loans have no clue about the interest they are paying, when the repayment will take place and what the terms of the bank are for early repayment.
Be aware of additional products
Some of the banks register you automatically for payment or credit protection insurance as soon as you borrow funds.
You must review the terms of the insurance to help identify whether you should stay with it or seek your own insurance policy.
Rules about Personal Loans in UAE from the UAE Central Bank
The UAE Central bankhas stipulated some rules with regard to personal loans as follows:
The maximum quantum of personal loans has been set as twenty times the monthly salary or total income of the borrower.
This implies that your complete personal loan eligibility is 20 times your monthly gross salary.
For instance, if your monthly salary is AED 10,000, then you are eligible for AED 200,000 of personal loans.
The repayment period of personal loans must not exceed 48 months.
DBR (Debt Burden Ratio)
Deductions from regular income or salary of any borrower for all kinds of loans issued by banks or finance companies must not exceed 50% of gross salary and regular income from a specific or defined source at a time.
This rule applies to private housing and car loans, credit cards and overdraft facilities and also personal loans. DBR for retirees is fixed at 30% of pension salaries.
Finance companies and banks may only take from the customer, the number of post-dated cheques covering the installment and value not exceeding 120% of the value of loan or debit balance.
Loans to self-employed
Loans extended to companies and a sole proprietorship, secured by salaries of owners of partners will be treated in the same way personal loans are treated and will be subject to the same terms and conditions.
Loans for Armed Forces
DBR is fixed at 50%. In case banks do not adhere to such rules, the Armed Forces may transfer salary to any other bank, without referring to the bank which extended the loan.
Personal loans can be extended as per application by the customer to be approved by the finance company or bank with a standard agreement.
This fee on personal loans cannot exceed AED 2500.
Processing of Personal Loan in UAE
The process of taking a personal loan is straightforward:
You get in touch with a bank or finance company via any medium like a branch office, sales team, online service, etc., and express your desire to apply for a personal loan.
2. Bank will ask for the following documents: Duly filled form of application, valid copy of passport, valid copy of visa, copy of Emirates ID, Labour Card and Company ID, bank statement of 3 to 6 months, the original letter of salary transfer.
3. After all this information has been verified by bank representatives, it is entered into the loan system, and documents are passed onto the processing center (Physically or electronically).
4. The officials at the processing center verify details and conduct credit checks like Etihad Credit Bureau checks, internal system checks, Central bank system checks, etc.
5. After this, the application is forwarded to the underwriter who declines or accepts the application after considering different aspects like if you fit in the internal policies of the bank, rules of the central bank, etc.
6. After this, the bank may place call verification at the office of your employer.
7. When the verification has been completed, your application is sent for issuing your loan.
8. You will be notified about loan approval and money will be credited to your account.
Why are Personal Loans rejected?
You have applied for a personal loan, but it is rejected. Some of the reasons for this are:
High DBR: If Your DBR exceeds 50%, you are refused a loan as per Central Bank rules.
Poor credit history: Banks can access your credit history via Etihad Credit Bureau. If you have not repaid other loans on time, your fresh loan will be rejected.
Irregular transactions in banks: In case your bank account exhibits irregular transactions such as full withdrawal of amount after crediting of salary, your personal loan request may be rejected.
In sum, to get positive approval of personal loans in UAE, you must keep up a healthy credit profile, a good bank statement, and not apply for loans in more than one bank. Because of the consolidation of records of all UAE banks at Etihad Credit Bureau, banks will now have access to your credit profile and your current outstanding applications.
Frequently Asked Questions on Personal Loan
What documents do I need to apply for a personal loan in UAE?
You will need to have the following documents to apply for a personal loan in UAE :
Emirates id Copy
Emirates ID copy
Salary transfer letter
Bank statements from 3 to 6 months.
2. Can a personal loan in UAE help me improve my credit score?
Yes. if you manage to build a strong payment history you can improve your credit score.
3. What is the benefit of a personal loan over a credit card?
The main benefit of getting a personal loan in the UAE is that interest rates would be lower compared to a credit card. A personal loan restricts how much you can spend, preventing you from going further into debt.
4. How much you can borrow with a personal loan?
The exact loan amount available often depends on your salary, bank, and credit score.
5. Can I take a personal loan from two different banks in UAE?
Yes. You should have a good credit score and your DBR should be less than 50%.