If you have an existing loan and need to extend your credit, then follow our guide to help you borrow more with as little hassle as possible. You might even end up with a better rate.

Extend your personal loan

Can I extend my loan with my bank?

Yes. If you have a loan and need to extend it, turn to your existing lender first. This is because they have already approved you as a borrower and, conditions permitting, will be happy to extend a loan particularly if you have an impeccable repayment record.

Remember, when you extend a loan you are effectively taking on a new loan and buying out the old loan. By doing so, you may even end up with a better interest rate if rates have gone down since you first took on the personal finance.

Do I have to resubmit all the paperwork?

I’m afraid so. A bank needs to scrutinise your suitability for a new loan amount in the same way they did when you took out the loan. However, as long as your total debt repayments – including other loans such as car finance or a mortgage – are no more than half of your monthly outgoings, approval should be straightforward.

As a reminder, the documents required include a current dated salary certificate (banks prefer customers who have been with their existing employer for three months or more), copies of your residence visa, passport and Emirates ID.

Can I borrow from another bank?

Absolutely. Shopping around for a new loan is also wise as you could end up with a better deal.  There are two options here. The first is to take out a second loan with the new lender, however remember you will have to pay another processing fee and will end up with two repayments to juggle.

Therefore a better alternative is to get the bank to buy out your existing debt.

To get the best deal from the new lender, remember banks generally offer lower interest rates to customers willing to transfer their salary to the bank.

Are there any other options?

Well, if you already have a loan of AED100,000 and only want an extra AED25,000, taking on a second or bigger loan might seem pointless, particularly if you only need the money short-term. This is because you are then locked into higher repayments.

Instead, check out the credit limit on your credit card and, if there is enough, use that instead. Yes, interest rates are higher on credit cards but it’s a great short-term solution particularly if you think you can pay off the debt quickly.  But like any debt, tread carefully and only take on liabilities you know you can repay.

How do I get the best deal on a loan extension?

To find that balance between the lowest possible loan tenure and the lowest possible repayment amount, work out the total cost of any potential loan whether it’s with your bank or another institution.

To do this, add the total amount you repay with any upfront costs such as a processing or administration fee and then compare it to the amount the bank will give to you. The bigger the difference between what you get and what the bank gets, the more expensive the loan is. When you do the sums also consider other fees such as early settlement or late payment fees. These will also affect the cost of the loan.