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Private Car Loans in the UAE

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Availability of public transport can seem like a cost-effective and even an eco-friendly option when it comes to day-to-day commute to work or college. But if you have a family or have errands to run every day, the benefits of owning a car in such circumstances cannot be undermined. Having your own car can come in handy in times of emergency or if you have the desire to go for a long drive. But purchasing a new or a used car is a financially-heavy expenditure. Meeting such a huge payment with a full down payment may not be the option for many people, especially if you are purchasing your car from a private seller as opposed to a car dealer. In such a scenario, private car loans in the UAE can help ease your financial burden.

Private Auto Loan

As per a survey conducted in the year 2019, the average price listing of a car in the UAE was found to be around 102 thousand Emirati Dirhams. So, you can either choose to pay the amount entirely in cash or opt for an unsecured private party auto loan in the UAE. This type of loan enables you to get a desired amount from a private source. In order to apply for this loan, you will need to first select the car you wish to purchase. Once your loan amount is approved, the lender will settle the financial transaction with the seller for the amount you owe. Then over time, you continue to pay the lender with interest added over the loan term pre-determined at the very outset.

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Important Factors to Consider Before Applying for a Private Car Loan in UAE

Here is a list of a few important factors that every borrower must consider to get a car loan in UAE:

1. Eligibility

Just because you are applying for a private party auto loan, doesn’t mean the process is going to be lax. Often private party lenders have strict requirements from the borrowers. This helps them secure the loan and ensure the money that they lend does come back to them over time. The criteria can range from minimum credit score, proof of steady income, upfront payment capability, age, mileage of the car, background check of the lender such as criminal record or history of drug/alcohol abuse.

2. Pay-Off Period Matters

The rate of interest on the private party auto loan will depend on several factors such as the loan tenure (usually 48-72 months), the car’s mileage, the borrower’s credit score records and the age of the car. The longer you sit on your loan repayment, the more interest you will end up paying. Ideally, your aim should be to pay off the car loan in UAE as soon as possible. So, it’s ideal to be mindful before choosing a loan term.

3. Application Requirements

Once you have selected the car and your lender and you are ready to embark on your private party auto loan journey, here are the documents you will be expected to furbish for ease of loan approval:

  • Valid passport
  • Emirates ID
  • Certificate stating your salary
  • Valid driver’s licence
  • Labour card
  • Bank statements from the last 3 to 6 months
  • Insurance policy records
  • Certificate stating the valuation amount of the vehicle
  • Documents mentioning the car registration

Benefits of Getting a Private Car Loan in UAE

If you are still confused about whether you are making the right choice by opting for private party car loans, here are some benefits to give you more confidence:

  • Lenders are often more open to negotiating a private car loan given the borrower has a strong credit history.
  • The ability to repay car loans quickly helps you stay on top of deadlines and build you an impressive credit history.

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Conclusion

Once your documents have passed the review round and your loan is approved you will be notified of the last steps and you can close the deal. The lender will sort out the cheque amount to the car seller. For the very last steps, you will need to transfer the registration of the vehicle and title to your name and you need to register the lender as the lienholder (a lender having a legal interest in the asset or property) on the title.

FAQs:

Q1. What is the minimum amount that lenders are willing to pay in the UAE?

Ans: The minimum amount that a private party car loan lender is willing to pay is around AED 20K.

Q2. What is the maximum loan repayment tenure for a used car?

Ans: Used or almost new cars can have a maximum repayment tenure of 60 months. However, cars that are more than ten years old have a repayment tenure of about two years or 24 months.

Q3. What is the minimum salary that a borrower needs to show in order to get a private party car loan in UAE?

Ans: The minimum salary that a borrower needs to show is AED 3,000 to AED 5,000.

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