Car Loan Interest Rate in UAE

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Getting a car loan in the UAE can help individuals buy their dream cars without paying the full amount upfront. But it's important to understand how car loan interest rates work. Interest rates are extra money you pay on top of the loan amount. In the UAE, car loan interest rates can vary depending on factors like your credit score and the lender's policies. It's crucial to compare different loan offers and understand the terms before choosing one.

Features and Benefits of Car Loans in the UAE

The key features and benefits of a car loan are as follows:

  • Easy Purchasing Procedure: Banks in the UAE offer finance of up to 80% of the applicant’s car value. On top of that, banks assure quick approvals and minimal documentation.
  • 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 loan 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 preferences.
  • 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.

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Best Car Loan Interest Rate in UAE

Given below is a list of top car loans. The table enlists the best car loan interest rates in the UAE along with their features and benefits:

Name of the Product Interest Rates Features and Benefits Apply
Emirates Islamic Bank- Green Auto Finance
  • Fixed Rate: Starting from 1.89% per annum
  • Reducing Rate: Starting from 3.61% per annum
  • A minimum salary of AED 5,000 is required.
  • Get a flexible loan repayment tenure of up to 5 years.
  • Get financing solutions for new and pre-owned vehicles.
  • Minimum documentation is involved.
  • Individuals are not required to make salary transfers.
Apply Now
Abu Dhabi Commercial Bank- Car Loan
  • Flat Rate: Starting from 1.99% per annum
  • Reducing Rate: Starting from 3.65% per annum
  • Finance up to 80% of the car value.
  • Enjoy 50 TouchPoints for every AED 1,000 loan amount.
  • Enjoy a loan repayment tenure of up to 5 years.
  • Get quick loan application approvals.
Apply Now
HSBC- Car Loan
  • Flat Rate: Starting from 1.99% per annum
  • Special car loan interest rate for electric vehicles: Starting at 1.74% per annum
  • Loan options are available for both new and used cars.
  • Salary transfer is not mandatory.
  • Financing options are available for electric vehicles and TESLA.
  • Holding a bank account at HSBC is not required.  
Apply Now
Emirates NBD- Flexi Drive
  • Flat Rate: Starting from 1.92% per annum
  • A minimum salary of AED 5,000 is required.
  • Get half-day application approvals.
  • Enjoy transparent pricing linked to 1-month EIBOR.
Apply Now
First Abu Dhabi Bank- Islamic Car Finance for Expats
  • Fixed Rate: Starting from 3.24% per annum
  • Reducing Rate: 6.07% per annum
  • A minimum salary of AED 7,000 is required.
  • This Islamic car finance option is available for salaried individuals.
  • Finance up to 80% of your car value.
Apply Now

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Documents Required to Get a Car Loan in Dubai

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

  • Original Emirates ID
  • Original Passport
  • Residence visa (applicable to expatriates)
  • Valid salary certificate
  • Bank statements, 3 to 6 months depending on the individual requirement of the bank
  • Valid driving licence
  • Inspection certificate of the car
  • Car insurance document
  • 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: The respective bank may or may not ask for additional documents as per the requirement. Make sure to get in touch with the bank authorities before applying.

Factors Influencing Auto Finance Interest Rates in UAE

The following are the primary factors affecting the car loan finance interest rates in the UAE:

  • 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 lower the interest rate. 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 indicates that you can pay off the loan within the loan tenure. As a potential borrower, 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.
  • Credit History: Having a good credit score and credit history represents you as a potential borrower. Applicants possessing a poor credit score may get their loan application rejected by their banks.
  • Loan Tenure: Loans with longer tenures generally have a higher rate of interest. For example, if you choose shorter tenure, you may easily get lower car loan interest rates.
  • Model and Age of the Car: Since additional collateral is not required to take car loans, your car itself functions as collateral. In case you are unable to pay off the loan, the bank may seize the car to cover the remaining loan amount. This is why the make and model of your car have a significant impact on the loan amount you can draw as well as the interest rate you get.

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Things to Keep In Mind Before Applying for a Car Loan

It is crucial to take a few points into account before proceeding with the loan application process:

  • Eligibility Requirements: Most banks set certain 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.
  • 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.
  • Comparison of Interest Rates: Make sure to compare car loan interest rates from multiple banks. First, shortlist a few products and then check their car loan finance interest rates. Note that banks initially provide you with 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.

Repayments: Defaulted payments of your loan instalments would lead to repossession of your car by the bank. Remember your repayment dates and the instalment amount.

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.

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