A number of banks in the UAE offer personal loans to expatriates with lower salaries. The minimum monthly salary requirement is usually AED 5,000 (as is the case at Emirates NBD, RAKBANK, Citibank, Mashreq and others). On the other hand, it’s also common for many banks to require borrowers to have a higher monthly salary. For example, HSBC requires a minimum monthly salary of AED 7,500, while the minimum amount is AED 7,000 for personal loans from the National Bank of Abu Dhabi. But what if you salary is less than AED5,000 a month?
If you earn less than AED5,000 a month, there are a few financing options available to you
Dubai Islamic Bank offers the Al Islami Goods Finance loan for expats who earn at least AED 3,000 per month. Bank of Baroda issues loans to workers with a minimum salary of AED 4,000 given they have documents to prove they have been working in the country for at least six months. Also, some banks with slightly higher salary requirements can take into account housing accommodation paid for by an employer, when considering a loan application.
You may also be able to take out a loan on your credit card, which is an alternative to the traditional loan products offered by banks. In this scenario you’d typically already be pre-approved by your bank for a specific maximum amount which could be credited to your bank account should you be approved. Customers who go this route usually do so when they need smaller sums and a quicker loan application processing time frame.
Most banks typically require you to transfer your salary
Do note that in most cases where a bank will extend a loan to you, it will require that your salary is transferred to an account with the bank every month. This gives banks a higher level of security and the ability to monitor your cash flow. Essentially, it’s an agreement between the lender and the borrower that your monthly salary would be transferred automatically to the specific bank in question. Not all companies allow employees to set up such loans and arrangements, so it’s wise to check first with your employer if this is possible.
Other standard requirements include salary certificates, employer documentation, previous bank statements and proof of being employed for at least six months. Some banks such as Emirates NBD require that a borrower’s employer be on the bank’s approved list of companies.
Also, pay close attention to the interest rates that are advertised on loans for lower salary customers. These rates tend to be much higher. Reducing rates can range from 4.9% to 19% (which is paid on the total loan amount per year), while flat rates usually vary from 2% to around 11%. You should always shop around first to see which bank would offer you the lowest rate with the terms that work best for you.
One more thing to keep in mind is the growing presence of the so-called “loan sharks” who usually target workers at the lower end of the salary bracket. These individuals usually advertise by word-of-mouth and sometimes even ask applicants to hand over their passports when giving out loans. However, with a lack of awareness among many expats and the rising cost of living, many residents end up falling victim to these illegal money lenders.