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As we all know, Dubai is one of the fastest-growing and glamorous cities in the whole wide world. But do you know that Dubai is also one of the cities with the highest number of vehicles? Whether you talk about new or second-hand, having your own car in the UAE is turning into a necessity rather than a luxury. And along with the car comes the most crucial thing you can't do away with- Protection for your car. So, if you live and work in the UAE today, you will probably need a personal car for commuting and leisure. However, buying a car while building a new life from scratch does not always go well. This is precisely why car financing is becoming more and more popular among UAE ex-pats and nationals. With car financing, you get to buy your dream car without costing an arm and a leg in one go, and of course, it saves a fortune. Luckily, paying back the loan is unrushed, and the loan amount can be paid off slowly over time. However, not to mention, there goes a lot in finding the right lender for your financing needs. Adding to that, you will have to take care of quite a few things, and one of these crucial things is car loan interest rates. And to do the same, you don't need to go anywhere else because we have covered everything you need to know about car loans, their benefits, banks that offer the best car loan interest rate in the UAE and what should you consider when taking out an auto loan. So dive right in!

Features & Benefits of Car Loans in Dubai

  • Easy Purchasing Procedure: The most appealing benefit of buying a car loan is that buying your car is no longer a tricky affair with car loans. Earlier, most banks only gave a maximum of 80% financing on cars. Now, almost all sellers and dealers are ready to give up to 100% financing. Yes, that's correct! This means that you can easily have your dream car financed with minimal paperwork and a tiresome waiting period.
  • Lesser Financial Burden: Choosing to finance your car instead of buying it on a lump sum basis relieves financial burden to a greater extent. This is because the payment is spread across a few years, and competitive car loan interest rates offer minimal interest as well. This eventually points to a lesser financial burden as you can get your car immediately, pay for it easily over time, and keep your current savings safe to use in an emergency. 
  • Flexible Tenures: Almost all car loan providers in Dubai offer flexible loans repayment tenure going up to a maximum of 5 years. Talking about more flexibility, you can pick any tenure that suits you best when taking a car loan in Dubai.
  • Financing of Second-Hand Cars: Keeping in mind the increasing popularity of used cars in the UAE, most car loan providers also offer car loans for buying second-hand cars. So, you can get equally competitive car loan interest rates in the UAE for used cars as for new cars.
  • No-Collateral Loans: Getting your car loan in Dubai without any collateral is as easy as it can be. For example, you do not have to put any assets you own on the line to get your car loan in UAE. This is because the car you buy becomes automatic collateral, eliminating the need for adding further collaterals. 
  • Options for Type of Interest Rate: Adding further to the flexibility of operation, car loan interest rates in the UAE are available as both fixed as well as floating rates. So, you can pick either of the two depending on your financial calculations. 
  • Improve Credit Score: You must be aware that taking a car loan diversifies your credit portfolio, which is one of the top ways to improve your credit scores. Moreover, the score further improves when you keep repaying each instalment on time. Therefore, if you are looking for ways to improve your credit score, car loans could be your ideal option.

Best Car Loan Interest Rates in the UAE

As evident, several different banks offer good car loan interest rates in the UAE. However, for your convenience, we have compiled a list of all the banks that offer the most competitive car loan interest rates in the UAE. So let's take a closer look at a list of all the top banks that offer the best car loan interest rates in the UAE and decent loan amounts for both new and used cars loans.

Dubai Islamic Bank

Established in 1975, Dubai Islamic Bank is known across the UAE for its incredibly innovative line of financial products and services. As the name suggests, Dubai Islamic Bank functions solely on principles of Islamic Banking. With products like Johra card in sight, Dubai Islamic Bank continues to make sure that every customer gets the services they desire, whether individual or corporate groups. Apart from credit cards, investment banking, home loans, personal loans and auto loans are some of the top-sought products of Dubai Islamic Bank. Below are details about the car loan interest rate in the UAE that Dubai Islamic Bank provides and other essential details related to DIB auto financing. Well, that's pretty interesting; read along!

Key Features of Dubai Islamic Bank Auto Loans

  • The minimum salary required to get a Dubai Islamic Bank auto loan is AED 3,000. Proof of income will be required as per the necessary documentation policy. In addition, the minimum salary for DIB Auto Takaful is AED 5,000. 
  • DIB auto takaful is a protection arrangement for your DIB auto loans. So, if you happen to face involuntary loss of employment, Noor Takaful will cover a few instalments of the auto loan on your behalf. Besides, the takaful amount is limited to AED 30,000. 
  • Salary transfers to DIB are not required. 
  • Individuals can take up to AED 1 million in auto financing, and companies can take AED 8 million for auto loans from Dubai Islamic Bank.
  • Tenure of up to 60 months is available for all car loan and financing options.
  • Available flat car loan interest rate ranges 2.10% p.a. to 5.50% p.a.
  • Available floating or reducing car loan interest rate ranges from 2.10% p.a. to 10.06% p.a.
  • Documentation and due diligence fees applicable for Dubai Islamic Bank car loans are set at 1.05%, which is calculated against the loan amount. Here, the fixed minimum rate is AED 520, and the fixed maximum rate is AED 2,620.
DIB Car Loan Type Flat Rate Reducing Rate
New Car Loan 2.35% p.a 4.42% p.a
Used Car Loan 0.75% p.a 5.19% p.a

Emirates Islamic Bank 

Emirates Islamic Bank was founded in the year 2004 with the principal goal to offer the highest level of Islamic banking services and products to the customers in UAE. Besides, the complete range of products offered by Emirates Islamic Bank caters to a broad spectrum of customers, including salaried individuals, small and mid-scale businesses and large national and multinational corporations. Additionally, Emirates Islamic Bank functions strictly as per the Sharia-based banking and financing business rules. Auto loans from Emirates Islamic Banks are one such sharia-compliant product.

Key Features of Emirates Islamic Bank Car Loan

  • The maximum available sum for Emirates Islamic Bank car loan is AED 1.5 million. 
  • The minimum salary required to get your auto financed from Emirates Islamic Bank is AED 4,000 for individual auto financing. 
  • 1% documentation and processing fee is applicable for all car financing cases. The minimum processing fee is set at AED 500, while the maximum processing fee is AED 2500.
  • Flexible tenure of up to 60 months can be availed as per your individual requirements. A grace period of 60 days is also offered to repay your first instalment. 
  • Emirates Islamic Bank does not provide buying out and rescheduling your auto loan.
  • You do not need to transfer your salary to Emirates Islamic Bank to get your car financed. 
  • Emirates Islamic Bank's car loan interest rate in the UAE ranges from 1.80% to 2.95% for salaried individuals. 
  • Comprehensive Islamic insurance is required for the vehicle you want to get financed from Emirates Islamic Bank.
Car Loan Type Flat Rate Reducing Rate UAE National
New Car Loan 2.29% p.a 4.2% p.a 2.15% p.a
Used Car Loan 2.59% p.a 5.48% p.a 2.49% p.a

Emirates Islamic Bank Car Loan Interest Rate for Certified Pre-Owned Cars: 2.29% for ex-pats and 2.15% for UAE nationals.

RAK Bank

A public joint-stock company, RAK Bank was founded in the year 1976, which makes it one of the oldest banks in the history of the UAE. It initially used to cater to only corporate clients but went under major reformation in 2001. After the 2001 reforms, RAK Bank shifted to personal banking and has been there since then. It is pretty popular for its customer-centric products catering to the customers' conventional and Islamic banking needs. Moreover, there are 27 branches of RAK Bank all over the UAE dealing in both personal and corporate finance products. For your convenience, car loans is one of these products mentioned in ample detail below.

Key Features of RAK Bank Car Loan

  • RAK Bank offers a maximum of AED 3 million car loans to corporate clients and AED 500 car loans to individual salaried clients. 
  • Auto financing for both new and used vehicles is available here. 
  • The minimum salary required for an individual is AED 5000 for all salaried individuals.
  • Available flat car loan interest rate offered to individuals starts from 1.79%.
  • The flat car loans interest rate for corporates and businesses start from 2.40%. In addition, businesses that have been in operation for longer
  • than 2 years can apply for a corporate car loan at RAK Bank.
  • Flexible loan tenure of up to 60 months is available for both businesses and individuals. 
  • Conventional comprehensive car insurance is required to take auto financing from RAK Bank. 
Rak Bank Car Loan Type Flat Rate Reducing Rate
New Car 2.35% p.a 4.26% p.a
Used Car 2.99% p.a 5.42% p.a

RAK Islamic 

RAK Islamic is the Islamic banking version of RAK Bank. It officially launched in 2013 with Islamic counterparts for all banking products and services that RAK Bank offers. Over and above, there is an internal Sharia committee that oversees the Islamic banking operations of RAK Bank. Islamic car loans offered by RAK Islamic are one of these most prominent services as well, and given below are a few details of the same.

Key Features of RAK Islamic Car Loan

  • A maximum of AED 500,000 can be taken as a car loan from RAK Islamic Bank.
  • Salaried individuals can get up to 80% financing for their cars, while self-employed individuals can get up to 100% financing for their car loans. 
  • Salary transfers are not required, and the first instalment of the loan can be paid within 60 days.
  • RAK Islamic car loans come with a flexible tenure of 60 months. 
  • The minimum salary required for car financing with RAK Bank is AED 5000. 
  • The flat car loan interest rate is set at 2.35%, and the reducing car loan interest rate is set at 4.26%. Additionally, an arrangement fee of 1% and an early settlement fee of 1% are also applicable.
Car loan Type Flat Rate Reducing Rate
New Cars 2.35% p.a 4.26% p.a
Used Cars 2.99% p.a 5.42% p.a

Standard Chartered Bank 

A London-based multinational bank, Standard Chartered bank has been a part of the global banking and finance industry since 1969. Standard Chartered Bank was initially established as Chartered Bank of India in Kolkata, Mumbai and Shanghai. Another bank named Standard Bank was founded in Britain in 1862. However, in 1969, both these banks came together and merged to form the Standard Chartered Bank. The currently known Standard Chartered Bank deals in many regions worldwide, including most of Asia, South Africa, Gulf regions and the west. Having said that, the SC Bank first came to the UAE in 1958 and established the first branch in Sharjah. The current UAE headquarters of SC Bank are in Dubai. It offers several attractive banking services and products, including financing, accounts, credit cards, etc. Apart from that, Standard Chartered car loan interest rates in the UAE are among the best you would find in the country.

Key Features of Standard Chartered Bank Car Loan

  • The minimum salary required to get SC Bank auto finance is AED 5,000.
  • The maximum loan amount allotted is limited to AED 1 million. Up to 100% financing can be opted for in auto loans offered by SC Bank. 
  • Standard Chartered Bank only offers auto financing for both new and used cars. The car loan interest rates are different for both, though.
  • Standard Chartered Bank flat new car loan interest rate starts from 2.49%, while flat car loan interest rate for second-hand cars starts from 2.75%. 
  • A processing and arrangement fee of 1.05% is applicable for all customers. In addition, the early settlement fee applicable for the service is 1%. 
  • The loan can be taken for a maximum of 60 months, and the maximum repayment period is 84 months.
Car loan Type Flat Rate Reducing Rate
New Cars 2.49% 4.72%
Used Cars 2.75%  

Noor Islamic Bank

A part of Dubai Islamic Bank now, Noor Bank or Noor Islamic Bank was established in 2008 as a private company. In addition, another matter of fact is that Noor Investment Group is the parent company of Noor Bank. Dubai Islamic Bank recently acquired Noor Bank, becoming its parent organisation. It deals in all major finance and banking services like credit cards, personal loans, auto loans and Islamic insurance. Moreover, Noor Bank is the 11th largest bank in the UAE in terms of assets. Car loans and financing is one of the most preferred products among the customers from Noor Bank. Over and above, it offers highly competitive rates and high loan amounts pre-approved for most customers. Given below is all you need to know about Noor Islamic Bank Car Loan.

Key Features of Noor Islamic Bank Car Loan

  • Noor Islamic Bank offers car loans up to AED 750,000 to individual customers. The maximum car finance amount available for ex-pats is AED 500,000. 
  • The maximum flexible tenure you can opt for is 60 months available for both salaried employees and self-employed folks. 
  • The minimum salary required to apply for a Noor Islamic Bank car loan is AED 8,000. However, this does not apply as an eligibility criterion for self-employed people, as self-employed clients must have an average annual turnover of AEF 50,000. 
  • Self-employed customers must have a business at least 12 months old and running. 
  • Noor Islamic Bank's flat car loan interest rate in the UAE is 2.64%, while the reducing rate is 5.02% is available as well. 
  • Salary transfers to Noor Bank accounts are not required when you get your car loan from Noor Islamic Bank. 
  • 1% arrangement fee is applicable. Early settlement of the loan can be done with a 1% fee as well. 
Car loan Type Flat Rate Reducing Rate
New Cars 2.64% p.a 5.02% p.a
Used Cars N.A N.A

 

insurer your car

Documents Required to Get Car Loan in Dubai 

Given below is the complete list of documents you will need to get a car loan in the UAE:

  • Your original emirates ID
  • Proof of income, for example, salary certificates
  • Passport and Residents visa 
  • Bank statements, 3 to 6 months depending on the individual requirement of the bank
  • Your driving licence 
  • Inspection certificate of the car 
  • Insurance documents of the car
  • Car registration documents or chassis number
  • Valuation of the car for second-hand cars
  • Title of ownership for second-hand cars
  • Seller quotation or quotation from a current owner for second-hand cars

Note: A few other documents may also be required as per the individual policies and requirements of the bank that you choose. So, confirm all the documents required with the concerned authorities at your bank.

Factors That May Influence Car Loan Interest Rates in the UAE

Like any other financial instrument subject to market forces, car loan interest rates can be influenced by several factors. Given below is a comprehensive list of the same:

  • Income Level: Debt-to-income ratio is a term that you will come across quite often when loans are concerned. The higher this ratio is, the better the interest rate you can hope for. Thus, the debt to income ratio represents your financial ability to pay off the debt you take on. Therefore, a good debt to income ratio will show the bank that you can pay off the loan that you are planning to take. Being seen as a trustworthy borrower by the bank, you may also receive a low car loan interest rate in the UAE. On the other hand, a bad debt to income ratio will lead to higher car loan interest rates since you will be seen as a high-risk customer. 
  • Down Payment Ratio: The lesser risk a bank takes on, the better car loan interest rate you can receive. For example, if you choose a high down payment amount, you will need a lesser loan amount from the bank. So, this decreases the risk for the bank and hence increases your chances of getting a better car loan interest rate in the UAE. In addition to that, higher down payment amounts also show that your financial foothold is relatively stronger. This represents you as a trustworthy borrower as well. 
  • Credit History: Whether it is a loan that you are seeking or simply a new credit card, your credit history will play a significant role. Along with that, loans and other similar financial products are all about how strong and trustworthy you are as a borrower. For example, if your credit history is all about ideal sums of borrowed money as well as timely payments, you have a good chance of getting low car loan interest rates. 
  • Loan Tenure: The longer you keep the bank's money with you, the higher interest they will charge you. However, this is true for any lender, actually, not just banks. So, loans with longer tenures generally get a higher rate of interest. For example, if you choose shorter tenure, you may easily get lower car loan interest rates. Another thing you need to keep in mind here is that even if the interest rate is fixed regardless of the tenure, you will end up paying more interest in long-tenure loans. The total amount of interest you pay at 10% p.a. on a loan amount of AED 10,000 in 3 years will be AED 3,000. Now, if the loan tenure is increased to 5 years instead, the total interest amount you pay will increase to AED 5,000. 
  • Model and Age of the Car: Since additional collateral is not required to take car loans, your car itself plays the collateral. This means if you are unsuccessful in paying back your loan, the bank can seize the car in question and sell it to cover the remaining loan amount. This is why the make and model of your car makes a significant impact on the loan amount you can draw as well as the interest rate you get. So, if it is a second-hand car you are driving, the car's age will also make an added impact on the car loan interest rate in the UAE. 

Things to Keep in Mind About Car Loans in UAE

  • Minimum Requirements: Most banks set minimum requirements in terms of age and salary. For example, individuals older than 21 years of age can apply for a car loan in the UAE. This requirement is the same for all financial institutions. Salary requirements, however, can be different for all banks and other financial institutions that offer car loans. Therefore, check out these things beforehand and get a fair idea of all the documents you will need when filing for a car loan. 
  • Tenure: Check out the maximum tenure available with the bank. Also, compute the total amount of interest you will have to pay overtime within a certain tenure. For example, choose a tenure that gives you decent instalments that you can easily cover every month but also doesn't leave with a lot of interest amount. In essence, find a sweet spot. 
  • Comparison of Interest Rates: Never forget to compare car loan interest rates from different banks. Basically,  figure out your top 3 or 4 banks, and then check what kind of interest rate each of them is willing to give you. Mind that every bank would initially give you a range of car loan interest rates and then later finalise it as per your salary, creditworthiness, the model and age of the car, etc. So, obtain a realistic idea of all your options and then choose the best car loan interest rate in the UAE. 
  • Repayments: Defaulted payments of your loan instalments would lead to repossession of your car by the bank. Moreover, be very mindful of your repayment dates and the instalment amount. Withal, design an excellent financial strategy to cover all loan payments adequately every month.  
  • EMI Calculations: Personally check the authenticity of the EMI breakdown of your car loan. Examine all the elements properly and ensure that EMI calculations are correct. This is even more important in the case of floating car loan interest rates in the UAE since they change over time. If required, take assistance from a financial expert or someone good with numbers.

Frequently Asked Questions

Q1. What is the minimum age to get car loans in the UAE?

Ans: The minimum age to sign up for a car loan in the UAE is 21 years. This is a common eligibility requirement across all banks and financial institutions.

Q2. Which banks offer the lowest car loan interest rate in the UAE?

Ans: Emirates Islamic Bank. RAK Bank and Dubai Islamic Bank are a few of the several banks that offer competitive car loan interest rates in the UAE.

Q3. What is the minimum salary required to get car loans in Dubai?

Ans: The minimum salary required to get a car loan in the UAE ranges from AED 3,000 to AED 4,000. However, the requirements may differ for each bank.

Q4. Is salary transfer necessary to get car loans in the UAE?

Ans: No, most banks do not require you to transfer your salary if you hold your salary account in some other bank. However, confirm this with the bank in question or read the fine print of terms and conditions.

Q5. Can ex-pats get car loans in the UAE?

Ans: Yes, ex-pats can easily get car loans from most banks in the UAE.

Q6. Can I get 100% financing for my car loan in the UAE?

Ans: Yes, some banks do offer 100% financing for cars now. However, additional terms and conditions may apply.

Q7. What is a valuation certificate? Do I need it to get a car loan in the UAE?

Ans: Valuation certification is an official document that contains the current market of a used car. If you are planning to finance a used car, a valuation certificate of the said car will be required to get the loan.

Q8. Are minimum income requirements different for salaried and self-employed individuals?

Ans: Yes, minimum income requirements will generally differ for salaried and self-employed customers.

Q9. Can I get my auto finance before I get my car?

Ans: Yes, most banks allow you to choose your auto financing options before you have even finalised your car.

Q10. Do I need takaful insurance to get my car financed from an Islamic bank?

Ans: Most Islamic banks make this an eligibility criterion to have comprehensive Islamic insurance, aka auto takaful, to get the car financed. However, this will depend solely on the bank's policies.

Q11. Can I get the EMI payment dates changed for my car loan?

Ans: Yes, most banks allow you to change your EMI date and schedule. However, it depends on the individual policies of the bank.

Q12. Can I get my car financed in my name if it has been registered in my spouse's name?

Ans: Yes, you can generally finance a vehicle from most banks, but certain terms may apply.

Q13. What is a decent interest rate on a car loan?

Ans: Car loan interest rates are generally same across all banks. What makes a real difference here is your income, debt to income ratio and loan tenure. If the interest rate seems to be justified as per these factors, you can consider it decent.

Q14. How to negotiate a car loan interest rate?

Ans: You can negotiate your car loan interest rates with banks. However, it is subject to your relationship with the bank and your credit history. If you plan to negotiate the car loan interest rate with your bank, make sure you have documented proof a good credit history. Having a realistic idea of your credit score will also help. Try and get the loan from a bank that you’re already subscribed to since banks value returning or existing customers. 

Q15. How to get a lower interest rate on a car loan?

Ans: Maintaining a good credit history is the biggest factor that makes a difference when it comes to getting a low interest rate on car loans. Apart from that, you need to be regular with your existing credit card payments and other related transactions. Financial institutions keep a track of all your financial history to assess your creditworthiness. Negotiate with the bank to see if you can scale down the interest rate.

Q16. What is the interest rate on a used car loan?

Ans: The best way to assess that is by checking out the policies and offers of the bank you want to take a loan from. Generally, these rates can range between 2% to 9%.

Q17. What is a good interest rate for a 72-month car loan?

Ans: The maximum tenure available is 60 months. It is important to note that interest rates go higher for lengthy tenures. 

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