Living in the UAE and looking for a loan? Here are some frequently asked questions that can help you get started:

How to get a loan in the UAE?

To get a loan in the UAE, an individual must qualify the basic eligibility criteria. This includes the minimum salary requirement as set by the bank, your residency status and who your employer is.

[Related: How your company influences your credit-worthiness?]

Your first step before getting a loan in Dubai or any other emirate, is to research. If your company is listed with the bank you are interested in, getting a loan becomes fairly easy.  If not, you can look for banks that offer loans to companies that are not listed.

Another key factor in determining your loan amount, is your debt to burden ratio (DBR). Your DBR is calculated by the bank by adding monthly repayments of all existing loans to the expected monthly payment from the new loan. On top of that, 5% of all your credit card limits are added. As per the Central Bank guidelines, your total DBR can’t exceed 50 percent of your salary, hence any new loans above this limit will not be approved.

How to get a personal loan in the UAE?

The basic eligibility criteria applies for personal loans as well.

For a personal loan no collateral is taken by the bank. The minimum salary requirements in the UAE starts from AED 3,000. Every bank though has its own policy and a list of approved employers. The required income level varies on whether you are salaried, self employed and willing to transfer your salary to the bank . The rates range from between 4.99 to 24 percent reducing. Loan repayment period is usually up to 48 months.

Basic documents for personal loans include:

  • Passport copy
  • Labour card or government issued ID card copy
  • Emirates ID copy
  • Salary certificate
  • Salary transfer letter (optional)
  • Three to six months of bank statements.

As a self employed:

For 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 six to 12 months. The length of your business will also matter. Check our Getting a loan when you’re self-employed article for more. You will need additional documents such as:

  • Trade license
  • Memorandum of association
  • Power of attorney of expat mentioning the borrowing clause clearly (in case of a sole proprietor)
  • Audited  financials

[Related: Guide to personal loan in the UAE | Flat rate or reducing balance explained | Islamic personal finance]

[Compare personal loans in the UAE]

How to get a car loan in the UAE?

You can get a car loan for both new and used cars in the UAE. The car you are planning to buy is mortgaged to the bank once you take out the car loan. The basic eligibility criteria remains the same.

The minimum salary requirements in the UAE for car loans starts from AED 3,000, varying from bank to bank. The rates will depend on whether you are buying a new or used car, but usually range from 2.25 to 15 percent flat and the loan repayment period is up to 60 months.

Basic documents for a car loan are similar to documents for personal loans, with the addition of:

  • Driving license copy
  • Vehicle registration card

After you select a car, your dealer can help you with the next steps. Typically, you send the dealer’s quotation to the bank along with the other documents. If your loan is approved, the bank issues a local purchase order (LPO) to the dealer. You are then required to complete the formalities at the dealership within 30 days, make your down payment (10 to 20 percent) and take the car home.

For a used car, don’t forget to check the minimum age of the car your bank will accept.

[Related: Guide to car loans | Buying a car in dubai | Islamic car finance]

[Compare car loans in the UAE]

How to get a home loan in the UAE?

Apart from the basic eligibility criteria, for a home loan the developer you select will determine which bank you can get a loan from. While some banks provide loans for all ready properties with title deeds, others restrict lending only to select developers. Be sure to check your property name with the bank you are interested in.

For home finance in the UAE, the minimum salary requirement starts at AED 7,000 for UAE Nationals and AED 10,000 for expatriates. The rates range from 2.99 to 7.25 percent reducing. Repayment period is generally up to 25 years and there is a down payment requirement (20 percent for nationals, 25 percent for expats).

When taking out a mortgage, factor into your calculation whether the rate is fixed (if yes, how many years?) or variable. Questions to ask  – Is the variable rate based on central bank’s EIBOR (how many months rate?) or the bank’s own standard? What’s the bank margin? What’s the minimum variable rate the bank will charge? Asking these questions will ensure there are no surprises in the future when the fixed rate period is over.

Basic documents for a home loan are similar to documents for personal loans, with the addition of:

  • Property documents such as sale agreement
  • Proof of down payment.

Self employed individuals will additionally need:

  • Trade License, copy of chamber of commerce registration, memorandum and articles of association
  • Two years of audited  financials
  • Company profile on letterhead
  • Letter indicating intent for use of property for rental or investment purpose as per banks format

[Related: Guide to home loans in the UAE | What’s EIBOR? | Islamic home finance]

[Compare home loans in the UAE]

How to get a business loan in the UAE?

For a business loan, UAE banks check how long a company has been in operation for, what’s the annual turnover of the company and its profitability. The minimum length of business is usually two years. However, few banks may fund businesses that are as young six months.

[Compare business loans in the UAE ]

Just like a personal loan, no collateral is usually required. However, the list of documents is more comprehensive:

  • Trade license
  • Passport copy of owners / partners with valid residence visa for expatriates
  • Emirates ID copy
  • UAE National sponsor passport copy
  • Share certificate / Certificate of incorporation
  • Memorandum of association
  • Power of attorney of expat mentioning the borrowing clause clearly (in case of a sole proprietor)
  • Two years of audited  financials
  • Utility bill or tenancy contract of the borrower
  • Six months of bank statements
  • Sales & purchase invoices

[Related: Guide to SME finance |SME Islamic finance ]

How quickly can I get a loan in the UAE?

This completely depends on the loan you are taking. After successful submission of documents, if your profile matches the bank’s criteria, you get a loan approval within five to seven days for personal loans and car loans. Home loans, business loans have longer turnaround time, around 10 to 15 days. Once approved, the loan may be disbursed within two days.

How to get a loan for a wedding?

Whether its a wedding, education, a holiday or even a home renovation – you can opt for a personal loans to generate funds for your goals.

How to get loan on a credit card ?

You can draw money out from your credit card as a short-term solution. The amount you can borrow depends on the card limit extended to you – usually 40 to 80 percent of the card limit as a cash advance. Do check the cash advance fee and the profit or interest rate per month.

[Related: Credit card vs personal loan | Credit card cash withdrawal fees add up fast]

[Compare credit cards in the UAE | Compare SME credit cards]

How to settle a car loan?

You can settle the car loan you have taken from your  bank by paying off the outstanding loan amount plus an early settlement fee. The process will vary for each bank, but generally you are required to apply for a liability letter enlisting the total amount you need to settle and then visit your branch to deposit the money. For conventional banks, the early settlement fee is typically one percent. For Islamic banks, you may be required to pay the entire profit amount for the whole tenure.

How to sell a car with loan in Dubai?

As a car owner, you can sell it back to your dealer – or directly to another individual. Since technically your car is mortgaged to your bank, you are required to settle your outstanding loan amount first and then transfer the car to the new owner. As a surety you can either ask your buyer to give you the cash upfront for the settlement – or if the buyer is taking a loan themselves – give them a copy of your car registration (mulkkiya) which they can then submit to the bank for a local purchase order (LPO). Once you have the LPO, you can settle your loan from your own funds and get a clearance letter (which comes in around seven days) from your bank stating that the car is now ‘lien -free’.

For car loans, there is generally no early settlement through a bank buy-out. However, in very exceptional cases (example: when the seller’s and the buyer’s bank is the same) the seller’s loan may be taken over by the bank for the buyer. The bank then issues a no objection certificate to the seller to transfer the car in the buyer’s name.