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Car Loans in UAE

Car Loans in UAE

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You don’t have to postpone or think twice before getting your hands on that snazzy, dreamy ride. With the concept of car loans in existence, getting a new car is possible way earlier and easier than it used to be. On top of that, the current market scope makes it a smarter choice to get you financed with a car loan instead of paying upfront. Today, almost all top banks are offering car loans in UAE and Dubai, with competitive car loan interest rates, flexible repayment periods along with several other benefits. In today’s day and time, Car finance in Dubai is a relatively easy and smooth task, given the fact that you are a well-informed buyer. 

Features & Benefits of Car Loans in UAE

Here’s a list of benefits and attractive features of getting car loans in the UAE.

Low and Negotiable Interest Rates: Car loan interest rates in UAE are rather low starting at 2%. Most banks offer both fixed and reducing car loan interest rates allowing customers have more repayment choices. 

Easy Processing: Your auto loan in UAE gets processed very quickly, courtesy flexible operations of top banks in the UAE. This simply means that you will not have to spend hours and days getting approvals, realigning or reassigning formalities for the purchase of your new car.

Low Minimum Salary Requirements: Depending on the bank you choose, the minimum salary required to get a car loan in UAE could be as low as AED 5000, making it possible for all working individuals to have a private vehicle.

Easy Way to Buy a Car: Getting a car financed in Dubai is one of the easiest ways to own a car. You can choose a simple, low-interest monthly repayment and become a car owner almost instantly. Car finance in Dubai eliminates months and sometimes years of gap between starting to save up for buying the car and finally being able to do so.

Flexible Repayment Tenure: All top banks in UAE offer flexible car loans repayment options. Customers can plan their repayment strategy and choose the EMI tenure and amount in the way that suits them the best.

Financing Used Cars: Car loans in UAE can also be used to get old and used cars in Dubai. Most banks in UAE offer financing for used cars at a slightly higher interest rate. The banks determine the maximum age and condition of the vehicle through an inspection.

100% Financing: While the more popular concept of car finance in Dubai is going 80-20 on financing and down payment respectively. There are many banks that offer 100% financing options for an auto loan in the UAE.

Improves Credit Score: Taking a car loan in Dubai and paying it off as per the EMI of your plan will substantially improve your credit score, ensuring better opportunities and reputation with the banks.

Good Credit History: Car loans in the UAE are one of the best ways to build your credit history. This ensures that your future loans applications with the bank will be smoother and easier to get approved.

Top Car Loan Providers in UAE

Following are the top car loan providers in UAE with their respective interest rates, along with highlights of the loan they offer:

ADCB Bank Car Loan

  • Maximum Car Loan Amount: AED 1.5 million
  • Car Loan Interest Rates: Fixed 1.99% p.a. and reducing 3.65% p.a.
  • Maximum Repayment Tenure: 60 months
  • Minimum Salary Required: AED 5000
  • Additional Benefits: 50 Touchpoints earned on every AED 1000 of the loan amount
  • Finance to Down Payment Percentage: 80%-20%

ADIB Bank Car Loan

  • Maximum Car Loan Amount: AED 500,000
  • Car Loan Interest Rates: Fixed 2.75% - 4.49% p.a. and Reducing 4.75% - 8.25% p.a.
  • Maximum Repayment Tenure: 60 months
  • Minimum Salary Required: AED 5000
  • Additional Benefits: Deferment for one yearly instalment and a grace period of 90 days for the first instalment.
  • Finance to Down Payment Ratio: 80% - 20%

Emirates NBD Car Loan

  • Maximum Car Loan Amount: AED 500,000
  • Car Loan Interest Rates: Fixed 1.99% p.a.
  • Maximum Repayment Tenure: 60 months
  • Minimum Salary Required: AED 4000 to AED 15000 (case basis)
  • Additional Benefits: Free credit card. Green loan for electric cars, 90 days deferment period on the first payment.
  • Finance to Down Payment Ratio: 80% - 20% for individual loans, 75%-25% for sports car, 90%-10% for companies

First Abu Dhabi Bank (FAB) Car Loan

  • Maximum Car Loan Amount: AED 1.5 million
  • Car Loan Interest Rates: Fixed 1.99% p.a. for UAE nationals / 2.15% p.a. fixed for ex-pats (salaried employees). 2.99% p.a. flat and 5.62% p.a. reducing for self-employed.
  • Maximum Repayment Tenure: 60 months
  • Minimum Salary Required: AED 8000 for salaried individuals and AED 25,000 for self-employed
  • Finance to Down Payment Ratio: 80% - 20%

Mashreq Bank Car Loan

  • Maximum Car Loan Amount: AED 500,000
  • Car Loan Interest Rates: 3.45% p.a. flat rate and 6.31% p.a. reducing rate
  • Maximum Repayment Tenure: 60 months
  • Minimum Salary Required: AED 5000
  • Additional Benefit: Free for life credit card
  • Finance to Down Payment Ratio: 80% - 20%

RAKBANK Car Loan

  • Car Loan Interest Rates: 1.99% p.a. flat rate for salaried applicants
  • Maximum Repayment Tenure: 60 months
  • Minimum Salary Required: AED 5000
  • Finance to Down Payment Ratio: 80% - 20%

Emirates Islamic Bank Car Loan

  • Maximum Car Loan Amount: AED 1.5 million
  • Car Loan Interest Rates: 1.80% p.a. flat rate and 2.95% p.a. reducing rate
  • Maximum Repayment Tenure: 60 months
  • Minimum Salary Required: AED 8000
  • Additional Benefit: Free Emirates Islamic current account
  • Finance to Down Payment Ratio: 80% - 20%

HSBC Car Loan

  • Maximum Car Loan Amount: AED 600,000
  • Minimum Salary Required: AED 10,000
  • Additional Benefit: 0.15% discount on flat interest rates for hybrid vehicles and 0.25% off on flat interest rates for full electric vehicles
  • Car Loan Interest Rates starting from 1.99% p.a. flat rate
  • Special flat Interest rate for TESLA - 1.74%
  • Reduced monthly EMIs with easy Balloon repayment options

Interest Rates Offered by Top Car Loan Providers in UAE

Banks Interest Rate (p.a.)
ADCB Bank Car Loan Flat: 1.99%, Reducing: 3.65%
ADIB Bank Car Loan  Flat: 2.75% - 4.49%, Reducing: 4.75% - 8.25%
Emirates NBD Car Loan Flat: 1.99%
First Abu Dhabi Bank (FAB) Car Loan  Flat: 1.99% - 2.99%, Reducing: 2.80% -5.62%
Mashreq Bank Car Loan  Flat: 3.45%, Reducing: 6.31%
RAKBANK Car Loan Flat: 1.99%
Emirates Islamic Bank Car Loan Flat: 1.18%

Car Loan EMI Calculator

A car loan EMI calculator is the simplest way to ascertain the amount to be repaid to the bank every month based on your loan amount, interest rate and car loan tenure. Using a car loan calculator is very simple. All you need to do is fill out the details and click the “calculate” button at the bottom of the auto loan calculator. The car loan calculator in UAE requires you to enter the principal amount, interest rate and the number of months in the tenure of the loan in the designated slots to compute and present the EMI break up for your car loan. Most EMI calculator will also show the amortization schedule of the loan where you will find the total amount and interest to be paid during the tenure written separately from the principal amount.

The formula used in the process of EMI calculation by EMI calculators is [P x R x (1+R)^N]/[(1+R)^N-1] where,

P = Principal amount

R = Rate of Interest

N = Number of Months in the Loan Tenure

How to Compare Car Loan in Dubai

Comparison is the key to choosing well. The best way to compare car loans offered by different banks and providers is by visiting a trusted banking services aggregator website like Policybazaar.ae. We have in handy a combined collection of all the data you need to decide on the right car loan provider for your upcoming purchase. We also have comparison tools to help compare two or more providers of your liking.

Consider looking for the following when comparing car loan providers

  • Car loan Interest rates offered by the provider – both flat and reducing
  • The maximum loan amount offered – whether it will be enough for the car you need
  • Loan for speciality and luxury cars – if you are looking to buy sports or other luxury cars
  • Maximum repayment tenure of the loan
  • Down payment ratio/percentage
  • Any additional special services offered

How to Apply for Car Loans in UAE

The world has grown into a digital playground for all kinds of banking products and services. Here are a few simple ways that you can use to apply for a car loan in UAE:

Online Application

Applying for a car loan online is the simplest. Most banks have a link to the application portal or an application form on the car loan page. All you need to do is simply fill in the required details and submit your application. The bank will reach out to you to discuss the term of the loan and take the process further. You can also apply for a car loan in UAE via Policybazaar.ae.

Offline Application

The traditional way to apply for a car loan in UAE, for an offline application, you will need to visit the nearest branch of the bank and discuss the terms of the car loan. Once decided, you can obtain an application form from the branch itself. Fill the form out, attach the required documents and submit the application to the bank for processing. Make sure you double-check with the bank for all the documents required for the application.

Documents Required for Car Loans in UAE

Just like any other loan, applying for a car loan would require a set of documents. Following is a check-list to help you through the documentation process:

Documents required for self-employed applicants

  • Duly filled car loan application form
  • Copy of Passport
  • Emirates ID
  • Visa page from resident Visa proving residency
  • Driving license of the applicant
  • Bank statements – preferably for the last three months
  • Trade license of the business
  • Power of attorney (POA)
  • Memorandum of Association (MOA) or Article of Association (in case of LLC)
  • Partnership agreement (in case of LLC)

Documents required for salaried applicants

  • Car loan application form filled by the applicant
  • Copy of Passport
  • Emirates ID
  • Visa page from resident Visa proving residency
  • Driving license of the applicant
  • Bank statements – preferably for the last three months
  • Salary Certificate of the applicant (not required if the salary is transferred to the bank providing you with the loan itself)

Some banks may also require additional documents as per their policies, such as the dealer’s quotation of the new car, the dealer’s evaluation of a used car, etc. Confirm with the bank that you are getting your car financed from about the documents required.

FAQs on Car Loans in UAE

Q1: What does a credit report mean?
Ans: This is a report that represents the credit history of an individual. It is generally prepared by a credit bureau.

Q2: What does default mean in car loans terminology?
Ans: Default is when the borrower fails to pay the lender (bank) back for the loan that they took, hence violating the car loan contract.

Q3: What does DBR mean?
Ans: DBR stands for Debt Burden Ratio. This is the ratio that helps the banks decide how much money they should lend an individual so that they can pay it back with ease. DBR can be calculated by dividing the monthly payment amount of the loan (EMI) by the monthly salary of the individual.

Q4: What is reducing car loan interest rate?
Ans: Reducing interest rate is calculated on the remaining due or outstanding amount of the car loan after repayment of a certain amount. This means that each instalment will be calculated as = outstanding amount (after the repayments in previous EMIs) x interest rate.

Q5: What is credit insurance?
Ans: Credit insurance is an insurance plan that helps pay off the policyholder’s debts in case of death and/or disabilities.

Q6: Is early payment available on an auto loan in UAE?
Ans: Yes, most banks allow early payments or prepayments on car loans but only after the initial 12 EMIs have been paid already. The condition may differ from bank to bank.

Q7: How much car loan can I take from the bank?
Ans: Almost all car loan providers in the UAE have an upper limit on the maximum amount they can lend to an individual. However, the final amount is generally decided on the car financing percentage (80% in most cases) and the DBR of the individual.

Q8: What is the maximum amount of time that I have to repay the car loan in the UAE?
Ans: Car loans in UAE mostly come with maximum repayment tenure of 60 months or 5 years.

Q9: Can I buy a car using a personal loan? Are there any disadvantages of doing so? Which is a better choice to buy a car?
Ans: You can buy a car using a personal loan, but there are several disadvantages that you may face. Personal loans generally have higher car loan interest rates than car loans, so you will end up paying a lot more than you could have if you had taken a car loan instead.

The only advantage here is that you do not have to give a down payment with personal loans. However, several car loan providers offer 100% financing for cars as well. So, it is a smarter choice to buy a car using a car loan.

Q10: Can I get a car loan if the car is registered under the name of my spouse?
Ans: Yes, many banks allow you to take out a car loan in this situation. However, it completely depends on the policies of the individual bank and additional terms and conditions may also apply.