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The United Arab Emirates has an extensive car market. Not to mention, the residents of the UAE are fond of cars and luxury vehicles and, this increases the demand for automobiles in almost every part of the country. Along with new vehicle sales, the country has a flourishing used car market, making it easier for individuals from all financial segments to own a car.

Several banks and financial institutions offer used car loans in UAE, further easing the financial crunch that a buyer may face for getting a car. Evidently, car loans are among the cheapest loans offered by the banks with minimal documentation. 

However, the process of loan approval for a used car is different from that of a new car and, it varies depending on the bank. The article below lists details of getting used car loan in the UAE along with the features and benefits of getting one. 

What is a Used Car Loan in the UAE?

Although car prices are affordable in the UAE, purchasing a car is a big investment. Accumulating funds at such a scale is not easy for most individuals. To resolve the issue, several banks and financial institutions offer car loans in UAE for convenient car purchases. By taking a car loan, you can easily purchase a vehicle and pay the amount back in flexible instalments with a nominal interest rate. 

Similarly, individuals willing to buy a used car can approach the bank and apply for a used car loan from any bank or private financing institution. The interest rate for a used car loan can depend on various factors and, it is slightly higher than loans taken against purchasing a car from the showroom. 

Additionally, used car loan interest rates also depend on the bank you are applying with and, you also need to inform the seller about car finance before purchase. Most banks in the UAE offer used car loans for vehicles not older than 5 years and the documentation for the same can take up to a week. 

Features & Benefits of Used Car Loans in UAE

Financing a car in the UAE removes the burden of paying a lump sum amount. You can pay your loan amount in flexible instalments at low-interest rates of around 4-5%. Not only this, there are several other features and benefits of acquiring a used car loan in the UAE as mentioned below. 

  • Competitive Interest Rate - Although used car loans are not as cheap as new car loans, you get affordable interest rates ranging from 2% to 5% depending on your credit score and the bank you are applying in. Additionally, you can opt for flat or reducing interest rates based on your ease of loan repayment. 
  • Flexible Loan Tenure - The banks and financial institutions in the UAE offer flexible loan tenure of up to 5 years. You can decide the tenure and instalment amount at your ease. However, you must note that for a longer loan tenure, you need to pay a larger interest rate.
  • Convenient Loan Processing and Approval - With a completely online loan application process, you can easily request a used car loan from the banks. Several banks offer same day loan approval. However, offline loan applications or acquiring loans from private financers may up to 4 business days. 
  • Early Settlement Option - Most banks in the UAE offer early settlement options. Using this feature, you can foreclose your loan account by paying the outstanding balances in a lump sum. You may need to pay an early settlement fee depending on the bank and the loan amount.
  • Low Salary Requirement - The banks lay down minimum salary criteria in order to offer loans in the UAE. Since car loans are affordable, you need to have a minimum monthly salary of AED 5,000 or above to purchase a car through a loan. 
  • Enhances Credit Performance - Acquiring a car loan and repaying your loan instalments improves your overall credit score. With a decent credit score and history, you ensure a good relationship with the bank and have better chances of accumulating larger loans in the future. 
Read: Minimum Credit Score required to get a car loan in UAE

Types of Used Car Loans Interest Rates in the UAE

You need to pay interest depending on your loan amount and tenure. The interest rate depends on several factors and the loan offering bank. Most banks offer two types of used car loans interest rates as mentioned below. 

  • Flat Interest Rates - The interest rate is calculated on the principal loan amount and the total tenure of the loan. It remains fixed throughout the entire loan tenure, meaning, the interest rate paid in the first instalment remains the same as the last instalment. 
  • Reducing Interest Rate - In the reducing interest rate, the calculation is made on the outstanding balance. Meaning, the interest you pay keeps on decreasing after every payment of car loan instalments. Reducing interest rate calculation is complex in comparison to flat interest rates. However, reducing the interest rate is considered more economical than earlier. 

Best Used Car Loan Interest Rates in the UAE

Numerous banks offer used car loans in the UAE, however, to find the best deals you need extensive research and the process becomes hectic. To ease your research, we have compiled the list of the used car loan offers in the UAE. 

Lending Bank Name Flat Interest Rate Minimum Financing Amount Maximum Financing Amount
Dubai Islamic Bank  3.70% AED 20,000 AED 1.5 million
Abu Dhabi Commercial Bank 3.50% AED 20,000 AED 1.5 million
Abu Dhabi Islamic Bank 3.25% AED 20,000 AED 1 million
Emirates NBD Bank 3.49% AED 30,000 AED 500,000
Emirates Islamic Bank 3.99% AED 20,000 AED 1.5 million
HSBC Bank 2.85% AED 30,000 AED 918,000

 

Top Banks Offering Used Car Loans in the UAE

Car loans are easily available to most individuals in the UAE. However, the various banks offer different interest rates, including other charges and fee that considerably increases the cost of your used car loans. To avoid paying unwanted fees and charges, you need to compare used car loans in the UAE. Following are the most preferred UAE banks, offering used car loans.

ADCB Bank

ADCB Bank is one of the most popular banks in the UAE offering several banking services and products such as individual bank accounts, corporate accounts and loans. Among various loans, ADCB offers some of the most affordable used car loans with interest rates of as low as 3.50%. Following are the details of ADCB used car loans in the UAE. 

  • Loan Tenure of up to 60 months
  • Maximum Loan amount of up to AED 1.5 million
  • Get up to 80% of the loan amount against your car value
  • Low minimum salary requirement of AED 5,000 or above
  • Processing fee of 1% with a maximum fee of AED 2500

Emirates NBD Bank

One of the largest banks in the UAE in terms of paid-up capital, Emirates NBD offer used car loans at competitive interest for flexible loan tenures. The bank offer hassle-free and quick one-day loan approval. Meaning, you receive the loan amount within the same day. Following are the details of Emirates NBD car loans in the UAE. 

  • Flexible loan Tenure of up 60 months 
  • Maximum car loan of up to AED 500,000,
  • Salary requirement of AED 4000 to 15000 depending on person to person basis,
  • 1% processing fee with a maximum charge of AED 2500
  • Get up to 80% of finance amount for a private vehicle, 75% for a sports car and 90% for company vehicles.

Dubai Islamic Bank

Dubai Islamic Bank is one of the largest Islamic banks in the world. Along with various sharia-compliant products, the bank offers an extensive loan and credit service. The bank offers used car loans at low-profit rates and low finance charges. Following are the features of Dubai Islamic Bank. 

  • Flexible loan tenure of up to 60 months
  • Maximum loan amount of AED 1.5 million
  • Low processing fee of 1% of the loan amount with a maximum charge of AED 2650
  • Forecloser charges of 1% of the outstanding loan amount,

Abu Dhabi Islamic Bank 

Abu Dhabi Islamic Bank is another well-known bank offering world-class banking products in the Sharia-compliant method. Among its various services and products, used car loans are amongst the most preferred. You can easily apply for a car loan online and get it quickly approved. Depending on your credit score, you get preferential profit rates and flexible loan tenure. Following are the features of Abu Dhabi Islamic Bank used car loans in the UAE. 

  • Flexible loan tenure of up to 60 months
  • Maximum used car loan amount of AED 500,000
  • A minimum income requirement of AED 5,000 or more
  • 1% processing fee of the loan amount with a maximum chargeable amount of AED 2,500
  • Get up to 80% loan amount of the value of your car. 

First Abu Dhabi Bank (FAB)

First Abu Dhabi Bank is one of the largest and safest banks in the world. The bank offers a range of financial services and products. Among various loan products, FAB car loans are popular among vehicle buyers. Offering used car loans at competitive rates, you get low financial charges to pay and flexible loan tenures. Following are the features of FAB used car loans in the UAE. 

  • Flexible loan tenure of up to 60 months
  • Maximum used car loan amount of AED 1.5 million
  • Low-interest rates ranging from 1.99% to 5.6% depending on individual’s employment and residency. 
  • Salary requirement of AED 8,000 per month for employed individuals and AED 25,000 for self-employed individuals.
  • Get a finance amount of up to 80% of your vehicle cost. 

RAKBANK 

RAKBANK is one of the oldest native banks in the UAE. Used car loans from RAKBANK are among the most affordable in the UAE with interest rates starting from 1.99% for salaried individuals. Along with numerous other benefits, you also get flexible tenure for loan repayments at your convenience. Following are the features of RAKBANK used car loans.

  • Maximum loan tenure of up to 60 months,
  • Finance to down payment ratio of 80% to 20% for a personal vehicle,
  • Processing fee of 1% of the loan amount, 
  • Option of early settlement depending on the outstanding loan amount,
  • Minimum salary requirement of AED 5,000 or above.

Eligibility Criteria for Used Car Loans in the UAE

Before applying for a car loan, you need to satisfy the requirements laid down by the banks. Similarly, for the used car loans, you need to fulfil the following eligibility criteria. 

  • Age - To apply for a used car loan in the UAE, you need to be at least 21 years of age. The maximum age until which you can acquire a car loan in the UAE is 65 years. 
  • Income Requirements - In order to obtain a used car loan in the UAE, you need to have a minimum income of AED 5,000 if you are employed. The criteria may vary for self-employed individuals.
  • Down Payment Requirement - As per the guidelines of the Central Bank, an individual needs to make a down payment of 20% of the current market value of the car. 
  • Credit Score - You need to have a decent AECB credit score to get your loans approved. A credit score of 700 or above is sufficient to approve your used car loans. 

Documents Required for Used Car Loan Applications in the UAE

After you have satisfied the eligibility criteria, you need to produce a few documents during the loan application. Following are the required documents, you need to submit while applying for used car loans. 

Documents required for salaried individuals

  • Car loan application form filled by the applicant
  • A valid passport ID with a copy
  • A valid Emirates ID with copy
  • Visa details of individuals from other countries residing in the UAE
  • A valid driving license issued by the Road Transport Authority UAE
  • Last 3-6 months bank statement,
  • Salary certificate issued by the current employer (not older than a month). 

If you hold a salary account in the same bank where you are applying for a used car loan, you don’t need to submit a salary certificate. 

Note:- The bank may ask for additional documents depending on your employment and financial status. Before applying for a used car loan, you should verify the same with your bank. 

How to Apply for a Used Car Loan in the UAE?

With digital advancement in the banking industry, you can conveniently apply for car loans within minutes and get them approved within hours. Following are the various ways of applying for a used car loan in the UAE. 

Online Application - You can conveniently apply for a used car loan by visiting the official website of a bank. You need to have your documents ready and upload them along with the online application form. Once your details are verified, your bank approves your loan amount and deposit in the required account. 

Offline Application - You can visit the nearest bank branch in person and apply for a used car loan in the UAE. You need to carry the documents mentioned above in addition to your personal identity and contact details. Later, you need to fill out an offline loan application form and submit your documents.

Used Car Loan EMI Calculator

The easiest way to calculate your car loan instalments is through Loan EMI calculators. You simply need to enter the loan amount and interest rate offered along with the car loan tenure in months. After entering the details, you need to press the calculate button. Later, you will get the estimated monthly instalment amount for your used car loan. 
The amount may not be precise since the bank includes several other charges like processing fees and loan insurance cost etc in the final cost of your loan. However, with a loan EMI calculator, you can get an approximate monthly instalment. 

Factors impacting Used Car Laon Cost in the UAE

Following are the factors that influence the cost of your used car loan in the UAE. 

  • Current Market Value of the Car - Depending on the current market value, your bank provides the loan. The total cost of your car loan directly depends on the principal loan amount. 
  • Type of Car - Based on the type of car, the motor loan cost can go up or down. A normal passenger car has a low loan interest rate in comparison to SUVs, and premium and luxury cars. 
  • Age of the Car - The interest rates of your car loan also depends on the age of the car. A new car has a lower interest rate in comparison to an old car. 
  • Salaried or Self Employed Individual - A salaried individual receives low-interest rates compared to a self-employed individual. 
  • Bank Where your Salary is transferred - If you apply for a used car loan with the bank where your salary is transferred. You get low-interest rates on your used car loan because you already maintain a relationship with the bank. 

Used Car Loan Frequently Asked Questions

Q1. Do I get an early settlement option for used car loans in the UAE?

Ans: Yes, several banks in the UAE offer foreclosure options where you can close your loan account before the loan tenure expires. You need to pay the outstanding amount in lump sum, including an early settlement charge.

Q2. How much interest rate do I need to pay for a used car loan in the UAE?

Ans: The interest rates for used car loans in the UAE is slightly higher than new car loans. In general, you may need to pay an interest rate of 4-5% of the principal loan amount. 

Q3. Can I apply for used car loans in the UAE online?

Ans: Yes, various banks offer a fully online loan application process. You simply need to enter your details and upload the required documents. After verification, the bank approves your loan within hours.

Q4. Can I apply for a used car loan if I am 20 years of age?

Ans: No, the minimum age requirement for a used car loan in the UAE is 21 years. Additionally, the bank accepts loan applications until the age of 65 to 70 years. 

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