How to Get a Car Loan in Dubai

Owning a car in Dubai offers immense freedom and convenience, allowing you to explore the bustling city and picturesque landscapes with ease. But for many, the cost of a car can be a significant obstacle. This is where car loans come in, providing a valuable financial tool to turn your dream car into a reality.

Requirements for Getting a Car Loan in Dubai

Before embarking on your car-buying journey, ensure you meet the eligibility requirements set by banks in Dubai. These typically include:

• Age: Between 21 and 65 years old
• Minimum salary: Varies, with some banks requiring AED 3,000 monthly income
• Valid Emirates ID and passport/visa: Proof of residency and legal status
• UAE driving license: Essential to demonstrate driving ability
• Proof of income: Salary certificates, bank statements
• Additional documents: Valuation certificates and car registration documents for used cars

Dubai Car Loan Interest Rates

The interest rate on a car loan in Dubai is dependent on several factors.

• Different financial institutions and banks offer different interest rates.
• Type of loan: Conventional car loans typically have lower interest rates than Islamic financing options.
• Loan Amount: Rates of interest may be higher if you borrow more money.
• Length of loan: Higher interest rates are often associated with longer loan terms.
• Credit score of the applicant: A high credit score may help you qualify for lower interest rates.

Loan Comparisons

Here are some of the current interest rates on car loans offered by popular banks in Dubai.

Note: Some factors, like interest rate, loan tenure, etc, can cause fluctuations in car loan prices, as this can impact your overall cost.

Considerations Before Getting a Dubai Car Loan

Here are some things you should consider before acquiring a car loan in Dubai:

Financial considerations:

1. Down Payment: 

A larger down payment will result in lower monthly payments and a lower overall loan amount. In Dubai, it is recommended to have at least 20% of the car's price as a down payment.

2. Interest Rate: 

The average interest rate on car loans in Dubai is around 3%. It is important to remember that interest rates may vary depending on the type of loan, bank, and credit score of the borrower. Individuals with high credit scores can get a low interest rate of 2%. Borrowers with low credit scores could face interest rates as high as 5%.

3. Loan Term: 

The longer the loan term, the lower your monthly payments will be, but you will pay more interest over the life of the loan. A shorter loan term will have higher monthly payments but will save you money on interest in the long run.

4. Monthly Payments: 

You must be able to afford your monthly car loan payments. Consider your other financial obligations and factor in the cost of insurance, maintenance, and fuel.

5. Debt-to-Income Ratio: 

Divide your monthly gross income by the total debt you owe each month. Lenders in Dubai generally prefer a debt-to-income ratio of 35% or lower. Here’s the formula to calculate your monthly payment:

DTI= Total monthly debt/gross monthly income

6. Fee/Hidden fees: 

Be aware of any hidden fees associated with your car loan, such as processing fees, late payment fees, and prepayment penalties. Here is the fee chart for car loans:

Car Considerations:

1. New vs. Used: 

New cars are more expensive but come with a warranty and lower maintenance costs. Used cars are more affordable but may require more maintenance.

2. Make and Model: 

Do your research and choose a car that is reliable, fuel-efficient, and fits your needs and budget.

3. Car History: 

Be sure to get a car history report to check for any accidents or damage.

4. Insurance: 

Car insurance is mandatory in Dubai. Compare quotes from insurance companies and compare prices.

Car Loan Calculator in Dubai

Here are the Car Loan Calculator formulas for Dubai:

Where:

• loan_amount is the total amount of the loan.
• interest_rate is the annual interest rate on the loan.
• loan_term is the length of the loan in months.
• monthly_interest_rate is the annual interest rate divided by 100 and then by 12.
• down_payment is the amount of money paid upfront towards the car.
• processing_fee is a fee charged by the lender for processing the loan application.
• document_fee is a fee charged by the lender for preparing the necessary paperwork for the loan.
• account_maintenance_fee is a monthly fee charged by the lender for maintaining the loan account.
• arrangement_fee is a fee charged by the lender for arranging the loan.
• total_hidden_fees is the sum of the processing fee, document fee, account maintenance fee, and arrangement fee.

Banks Offer Car Loans

Here are some of the popular banks offering car loans in Dubai, with full details and contact information:

1. Emirates NBD

• Website:https://www.emiratesnbd.com/en
• Phone: +971 600 540000
• Loan Types: Conventional and Islamic
• Interest Rates: Starting from 2.69% p.a.
• Features:
• Pre-approved car loans are available
• Flexible repayment options
• Online car loan application
• Car insurance and extended warranty options
• Deferral of the first payment for up to 120 Days
• 0% auto cash loans for selected partners
• AUTOSWAP program for selling existing cars without settling loans
• Contact: Visit their website, call them, or visit one of their branches.

2. Dubai Islamic Bank (DIB)

• Website:https://www.dib.ae/
• Phone: +971 800 444 444
• Loan Types: Sharia-compliant
• Profit Rates: Competitive
• Features:
• Flexible repayment options
• Early settlement options
• Online car loan application
• Dedicated car loan centers
• Sharia-compliant car financing options
• Contact: Visit their website, call them, or visit one of their branches.

3. Mashreq Bank

• Website:https://www.mashreqbank.com/en/uae/neo/
• Phone: +971 4 424 4444
• Loan Types: Conventional and Islamic
• Interest Rates: Competitive
• Features:
• Flexible repayment options
• Early settlement options
• Online car loan application
• Car insurance and extended warranty options
• Dedicated car loan centers
• Contact: Visit their website, call them, or visit one of their branches.

4. Abu Dhabi Commercial Bank (ADCB)

• Website:https://online.adcb.com
• Phone: +971 600 500 500
• Loan Types: Conventional and Islamic
• Interest Rates: Competitive
• Features:
• Flexible repayment options
• Early settlement options
• Online car loan application
• Car insurance and extended warranty options
• Dedicated car loan centers
• Contact: Visit their website, call them, or visit one of their branches.

5. First Abu Dhabi Bank (FAB)

• Website:https://www.fab.com
• Phone: +971 600 522 222
• Loan Types: Conventional and Islamic
• Interest Rates: Competitive
• Features:
• Flexible repayment options
• Early settlement options
• Online car loan application
• Car insurance and extended warranty options
• Dedicated car loan centers
• Contact: Visit their website, call them, or visit one of their branches.

Benefits of a Car Loan in Dubai:

Owning a car in Dubai offers numerous advantages, including:

• Convenience and freedom: Explore the city and surrounding areas at your own pace.
• Increased mobility: Improve your commute and access to essential services.
• Enhanced lifestyle: Enjoy greater independence and flexibility in your daily activities.
• Potential asset appreciation: Owning a car can be seen as an investment, especially for certain models.

FAQs

What are the requirements for a car loan in Dubai?

Car Loan Requirements in Dubai:

• Age: 21+
• Salary: AED 3,000-5,000+ (depending on the lender)
• Employment: Full-time
• Visa: Valid residence
• Credit: Good
• Down payment: 20% (minimum)
• Documents: Passport, ID, salary certificate, bank statements (trade license if self-employed)

How can I check my car loan eligibility in Dubai?

To Check Car Loan Eligibility in Dubai:

• Use online eligibility checkers on lender websites.
• Submit a pre-approval application.
• Speak to a loan officer at a local bank.

What is the rate of interest for a Dubai car loan?

Car Loan Interest Rates in Dubai for Conventional is 2.69% - 5.99% p.a, and for Islamic, it is 2.89% - 6.35% p.a.

How to get 0% interest car loans in Dubai?

You can obtain 0% interest on car loans in Dubai if you meet certain conditions. Many banks and financial institutes offer promotional offers or tie-ups that provide 0% interest on car loans.

Here are some options to obtain a car loan with 0% interest in Dubai.

• Promotional Offers
• Consider a short-term loan
• Select specific car models
• Negotiate with the dealer
• Use credit cards

What is the age limit to apply for an auto loan in the UAE?

In the UAE, you must be at least 21 to apply for a car loan. This is true for both conventional car financing and Islamic options.

What is the car loan payment period?

In Dubai, the repayment period for a car is usually between 12 and 60 months. You can pay back the loan within a year or for 5 years.