Personal loans are amounts borrowed for personal purposes like education or marriage expenses.
The borrower receives a sum amount at the beginning of the loan and is free to do what he or she wants with the loan amount.
The most distinctive feature is that the loan is an unsecured loan, without any collateral or assets as underlying security.
How to Qualify for Personal Loans in UAE
In UAE, banks are strict about lending personal loans and only lend to persons, who are salaried and are working for one among a list of approved companies.
Firstly you need to understand how personal loans in UAE works .
In most cases, the minimum level of salary required for a personal loan is AED 3000. But this rule changes from bank to bank.
The debt to income ratio is set at a maximum of 50%. These rules are stipulated by the UAE Central Bank for regulating the banks. These are only basic needs.
Every bank may have unique demands as per their credit policies. The good news is that it is exceedingly easy to apply for a personal loan in UAE. This is because of consumer-friendly institutions and progress in technology
Personal loan for nationals of the UAE:
Getting personal loans is a cake walk for the UAE nationals. For them, loans are available at favorable terms and conditions. There are also attractive interest rates.
Additionally, tenures of loans are pretty comfortable for consumers, and they have flexible eligibility criteria.
Another bonus is that their loans have simple and easy paperwork. For self-employed professionals
Such professionals are those who run their own business. Such persons may find it tough to get personal loans. The main reason is that they do not have a fixed income.
But the positive news is that there are many financial institutions and banks open to the idea of lending to self-employed professionals.
So, you can apply for a loan without fear.
Personal loan for expatriates
Those expatriates, who come to the UAE, can also request for personal loans to take care of financial obligations.
It must be crucially noted that terms and conditions are different from those offered to the UAE nationals.
But what matters is that there do exist attractive deals for them.
Loan without transfer of salary
It must be noted that most banks offer personal loans only to those who transfer their salary to the banks.
However, this is not a hard and fast rule; many banks in the UAE offer personal loan without requiring the transfer of salary to their coffers.
Type of Loans Based On Interest Rate
There are typically two kinds of interest rates charged on personal loans when you are approaching banks in the UAE.
Flat interest rate:
In case, you are availing of a flat rate of interest on a loan; it simply means that sum payable and interest are calculated at the beginning of the repayment and remains this way till borrowed money has been paid off.
Reducing interest rate
On the other side, reducing rates on loans work, by reducing the principal amount after every installment that is paid. Mostly, the constant percentage of interest is charged on reduced amounts every month. This works out to different installments due every month.