6 Personal Loan Comparison Tips to Ensure the Right Deal in UAE!

During tough times, when you require extra cash in case of an emergency or when unplanned expenses arise, a personal loan can be your best pal. The best part is that loans in the UAE are heating up these days. If you need immediate funds, there is a wide range of loan options you can choose from.

For all those who are looking to borrow funds, it is recommended that you should not settle with the first suggestion or loan option, which you come across. No matter it is from your bank or you get it online or a roadside advertisement.  When it comes to taking up a personal loan, you should consider certain parameters. You should run a personal loan comparison considering the fee payable, loan repayment ability, fee and charges, rates of interest and various other factors. Here is a list of factors to be considered for ensuring the right type of personal loan.

Research Well

The key to making sure that you are updated with the eligibility criteria, fees and charges and hidden clauses (if any) is the personal loan comparison. First, you should decide if you want to get the loan from a conventional bank or an Islamic Bank. Although the rates can be competitive, the way of arranging the loan is different in both these banks. This is because the Islamic Banks have to make sure that their loans comply with Sharia laws. There can be huge variations in the products and may include niche offers to sponsor travel, rent, or education.

Calculating the Repayments

You’re mistaken if thinking of opting for a personal loan in UAE without considering the specified chunk to be deducted monthly. You should calculate the accurate monthly repayment for every loan that you are comparing. Only then, you can decide an affordable and realistic amount of loan to borrow from a particular bank.

Fees and Charges

Research the charges and fees applicable on every loan like the processing fee, late payment charge, early settlement charge, insurance charge, loan re-scheduling and more. Check which personal loan charges what amount of fees. Some of the fees and charges included in personal loan are as follows-

  1. Arrangement or Processing Fee: This amount can be one or two percent of the amount of loan or a fixed amount. This is usually added to your principal loan.
  2. Early Settlement Charges: Early settlement fee is charged when you settle the remaining balance of the loan before the loan tenure ends. This fee is charged on the outstanding balance.
  3. Late Payment Charge: The banks may levy this fee when you make late payments every month.
  4. Insurance Charges: A few banks offer insurance cover for unemployment or critical illness. Check if the charges on this insurance are built in your repayment.

Eligibility Criteria

Personal loan in the UAE comes with minimum income requirement. You might have to transfer the salary to the concerned bank and must be an employee of a company, which is a part of the approved employer's list of the concerned bank to enjoy personal loan benefits. This list of approved employers is a pre-determined list, which checks your credit-worthiness depending upon the track record provided by your employer. The Al Etihad Credit Bureau provides credit reports to the banks, which contains the liabilities of the potential customer. Due to this, the bank can save itself from collecting endless documents, bank statements and the employer’s information for assessing the credit history.

Total Debts

As per the rules of the Central Bank, you are not allowed to use more than a certain percent of your salary towards card repayments and loans. Hence, in case you apply for a loan when you already have existing debt, you might have to struggle in gaining approval.  To save time, you should calculate repayments on your total existing debt to check if you are eligible for borrowing more or not.

Comparing the Correct Rates

There exists no standard method for advertising personal loan interest rate or profit rate in the UAE. Hence, few banks offer loans at reducing rates, some at flat rates, and some at both. However, the difference becomes important when you assess the loan cost. A flat rate, generally lower than reducing rate, considers the entire loan for calculating the interest. It does not consider the amount, which you have already paid off. The reducing balance interest rate considers the loan balance outstanding for calculating the interest. The outstanding balance keeps reducing as you make repayment of the outstanding balance.

To Sum Up!

 In order to avail the various personal loans benefits in the UAE, it is imperative that you zero down on the right option. However, which personal loan to go for is a question of the hour? Here comes personal loan comparison into the picture. It helps you get the loan that suits your requirements the most. Make sure that you do not add to your debt-burden in the name of the personal loan instead of getting debt-free. Research well, compare all the options, only then make a decision.

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