8 Smart Tips to Avail a Personal Loan in the UAE at a Low Interest Rate

A personal loan is a handy financial tool that is quite easy and convenient to apply and hassle-free to repay. Since personal finance is an unsecured loan, you don’t secure the loan with a guarantor or collateral. Due to this, there are high chances that you may find a personal loan in UAE at a high rate of interest.

If you are wondering how to avail a consumer loan at a low rate of interest, then fret not.

Here we have mentioned 8 smart tips that you can use to get the best interest rate on a personal loan in Dubai, UAE.

Build a Good Credit Score

Banks decide the approval of consumer loan based on your credit score. An excellent or good credit score increases your chances of availing personal finance at a low interest rate. This is because a good credit score makes you more financially stable in the eyes of the lender.

However, if you have a poor credit score because you have not made timely repayments on your existing loans or because of an error in your credit report. Thus, it is very important to pay your credit card bills or any other existing loan repayment on time to maintain a good credit score. The higher the credit score, the low interest rate on a consumer loan you will get.

Beware of Hidden Cost or High Processing Fees

Personal finance with a low rate of interest is ideal but it only makes senses when the lender does not levy any sort of hidden fees & charges on a consumer loan. As some banks and financial institutions offer a personal loan in UAE at the low interest rate but they charge a hefty processing fee. Other charges such as pre-payment, foreclosure, and cheque bounce fee may also be very higher. Even though all of these fees & charges may be one-time charges or you may feel you may have not to pay, their deduction will significantly reduce the burden of your wallet. So, make sure you know about all the fees & charges that are associated with personal finance in order to make a smart decision.

Understand How the Interest Rate Is Calculated

Do not just opt for personal finance based on its low rate of interest only. Rather it is very crucial to understand complete loan calculation while procuring a consumer loan. Although few banks and financial institutions may offer a low interest rate on personal finance, sometimes they could stretch the loan repayment tenor for a low rate of interest which is obviously not beneficial for you. A long loan repayment tenure will simply mean the personal loan amount you pay as interest over the term will also be higher. Thus, it is vital to keep the personal finance interest rate as well as loan tenure low.

Repay Your Debt before Applying For A Consumer Loan

One of the key factors that banks or lenders may consider before sanctioning personal finance is your debt-to-income ratio.

Debt-to-income is basically evaluated by taking out the sum of your entire monthly debt obligations & dividing this amount by your monthly income before tax.

If your debt-to-income ratio is high, you might be a risky borrower in the lender’s eyes and they might offer you a high rate of interest on personal finance. So, if you want to avail a loan at a low interest rate, then make sure you pay off your existing debt especially your credit card bills before applying for a consumer loan.

Compare Multiple Lenders

Availing a personal loan from the right lender is as important as getting it at a low interest rate. Because if you are getting it at competitive interest rate but the lender is not reliable in terms of their services, you may end up experiencing financial mess from hidden fees & charges, unreliable policies, poor communication. Therefore, choose a lender with care. To get it right, you should first select an instant consumer loan. After that, compare it based on its interest rate, charges, and features with others and choose the one that suits your needs and budget the most.

Avail Seasonal Offers

Banks or lenders offer an attractive rate of interest on personal finance at some specific period of time in order to match up to the competitive corporate interest rates that are being offered by other lenders or banks. Such lucrative schemes are usually launched during the festive season and they last for a very limited period of time only. Thus, availing a personal loan in Dubai, UAE during such occasions is very beneficial and could help you to save a lot of money on your loan expenses.

Build a Good Relationship with the Lender

Sometimes you can avail a discount on the personal finance interest rate, depending on your relationship with the bank. If you are an old customer of the bank and you have maintained a good credit score, the bank offers you a consumer loan at a low interest rate in order to retain you as their customer. Another great benefit of taking personal finance from a familiar bank is that the lender is already well aware of your credit behavior which works as a reassurance while offering a loan. Borrowers with a good credit score have the privilege to get a low interest rate on a personal loan than what it is offered to other borrowers.

Know If Your Employer Has Tie-Up with Banks or Lenders

Banks or financial institutions are often interested in offering a consumer loan to those customers who are working in well-renowned organizations as it speaks a lot about their regular source of income and job stability. In fact, few banks also have tie ups with companies that entitles you to avail discount on the personal finance interest rate. So, you can also find out if the company you are currently working with has such benefits or not before applying for a consumer loan.

To summarize

Availing a low interest rate on a personal loan is as important as getting a good scheme from a reputable and reliable lender. As this will ultimately help you to save a lot on your loan expenses and make it easy for you to repay the personal loan amount.

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