Our Guide to Personal Loans in UAE
Souqalmal.com is the leading price comparison in the Middle East allowing users to compare over 450 banking products in the UAE. The personal finance section allows you to compare over 65 personal finance products in the UAE from the banks in Dubai and Abu Dhabi. With 8 main different features of personal loans and financial products that would be of interest to you, you can refine your search to see the best personal loans suited for you.
What should you know before comparing personal loans in the UAE?
1. Amount required. Each UAE bank has a maximum loan amount they will provide you. Once you know how much you need, make sure you compare the loans whose maximum payout is higher than what you need.
2. Minimum salary requirement – Each UAE bank will impose a minimum salary they require you to have to give you any loans - When you are looking to compare loans, try and select only the ones with a minimum salary less than your monthly pay.
3. Arrangement fees – This is a fee the bank would charge you at the beginning of the loan and is clubbed with your principal loan amount. Some of the arrangement fee on offer may be 0% but they can also go up to AED 600 or 2% of your loan depending on the loan you have requested for.
4. Early settlement fee - If you are planning to take your personal loan for 5 years but thinking of paying if off before then, the early settlement becomes an important factor in your decision. This is a fee that is imposed on you if you decide to pay off your loan early. Check the fine prints as some of the offers on early settlement fees only applies if you settle in cash and not if you are refinancing.
5. Flat and Reducing Rates: Rate is still considered to many people one of the most important factors to consider in a personal loan. But this is where there is the most confusion as well. A rate on a personal loan can be calculated in two ways - as a reducing rate or as a flat rate. Reducing rate is calculated on the outstanding balance of your loan and flat rate is calculated on the principal amount throughout the duration of your loan. So a loan at a reducing rate of 8% is exactly the same as a loan at a flat rate of 4.41% (the general rule is you divide reducing by 1.813 to get the equivalent flat rate) - So be careful when you compare rates as one bank maybe advertising a reducing rate loan and the other a flat rate loan. On Souqalmal.com, we have calculated the equivalent for you for each loan so you get to compare apples with apples.
6. Salary transfer: UAE Banks have different rates for customers who would want to open an account and have their salaries transferred into the account from their employer every month versus a customer who doesn’t transfer the salary. The bank will consider a customer with a salary transfer less risky and generally offers a lower rate. Some banks do not offer personal loans to customers who do not wish to transfer their salary. You can view whether a salary is required or not on Souqalmal.com.
7. Islamic or conventional: Are you looking for a personal finance that follows the Shariah law? On Souqalmal.com, you can search and compare all Islamic personal finance options in the UAE.
Islamic Personal Finance
There are many concepts banks use to provide personal finance. Using the Murabaha, the bank would normally buy the product and then re-sell the product to the customer at a higher price. The profit can be made in monthly installments and referred to as a profit rate.
Extending your personal loan
If you need to extend your personal loan, there are ways you can look into. You can contact your bank to see if they are happy to extend your current loan or you can buy out your loan by another bank, also known as refinancing. Make sure you understand any fees or charges applied to the loan if you get out early such as early settlement fees
What are your options of personal loans
There are over 50 banks in the UAE and many options to choose from. Whatever the reason for taking out a personal loan, make sure you compare them, the rates, the early settlement fees and the arrangement fees. You may also want to look at the customer service of the bank before taking up your personal loan.