How to Choose the Best Bank for Personal Loan in the UAE

By PolicyBazaar
  | Published: 09 June 2021

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A personal loan is an unsecured loan, that is, unlike a car or home loan it is not secured against an asset like property or gold. It is obtained by an individual from a bank or a non-banking financial company to meet the shortfalls in their personal expenses. Certain key criteria like the level of income, employment and credit history, repayment capacity, etc. help one procure the loan with ease.

For someone living in the UAE or expatriates who want to ease their financial burden, choosing a bank to get a personal loan can be a tricky task. Here are certain tips to alleviate your anxiety while making such an important financial decision:

1. Research the Rate of Interest

Different banks offer different loan amounts for varying rates of interest. Thoroughly research the market about the different banks and their offers. Traditional Islamic banks such as Emirates Islamic bank personal loans are offered at low-interest rates while conventional banks usually have higher rates of interest but they are far more flexible in their repayment options. Make sure you compare multiple banks before arriving at a decision. Take an informed decision to get the burden off your shoulders quickly.

2. Pay Attention To the Flat Rate

Flat interest rate is calculated on the full principal amount of the loan every month, throughout its tenure. For instance, if you have taken a loan of 500,000 AED at a flat rate of 10% for 5 years, you would be paying an interest of be AED 4,167 every month throughout the term of the loan.

Here’s an overview of the flat rate of some of the top banks in the UAE for Personal loans:

Bank

Flat Rate

Emirates NBD Personal Loan 

2.9%

RAKBANK Personal Loan

3.3%

ADCB Personal Loan for Expats

3.3%

Emirates Islamic Personal Finance for Expats

3.99%

Dubai Islamic Bank Personal Loan

6%

3. Ease of Repayment

Make sure to check out the bank’s repayment policy, comparing it with other banks to pick an alternative that best suits your requirements. For example, choose an auto-debit facility by tying it to your salary payment schedule to make sure that the repayment is done timely. Pay attention to the grace period offered by banks for instances when you find yourself in a pickle and need some extra time.

4. EMI

Borrowers are often offered a choice by almost every bank to return the amount in a certain period of time. The timeline for returning the money can extend from one year up to five years with a different rate of interest for every offer. Make a realistic choice and find out how much you can pay in EMIs(Equated Monthly Instalments). Do not plan your EMIs on the basis of future plans and assumptions. Your loan tenure also determines the interest rate you will be expected to pay. The higher the repayment period, the higher is the interest amount. You can also Calculate your personal loan EMI with a personal loan EMI calculator

5. Minimum Salary Requirement

The applicants seeking personal loans in the UAE must be currently employed with firms or companies that are eligible to apply for personal finance as well as the minimum salary requirement for applying is AED 3000. It is also important to remember that the applicant must be 60 years for expatriates and 65 years for UAE nationals at the time of loan maturity.

Given below is an overview of the minimum salary requirement of some of the top banks in the UAE for Personal loans:

Bank

Minimum Salary Requirement

Dubai Islamic Bank Personal Loan 

AED 3000

RAKBANK Personal Loan

AED 3000

Emirates Islamic Personal Finance for Expats

AED 5000

Emirates NBD Personal Loan 

AED 5000

ADCB Personal Loan for Expats

AED 5000

6. Contemplate the All-in-Cost

Getting a loan is not just about doing paperwork and getting the money in hand. Several banks charge registration fees, processing fees, and so on along with the interest rate. These charges are usually a percentage of the amount of money you plan to borrow. Do your research as to which banks offer the best deal, negotiate a little, and figure out how much you’ll need to pay the bank in total, including all the charges, fees, interest, etc. For instance, RAKBANK personal loan allows you to defer a one-year instalment for free on paying instalments regularly for 6 months.

Here are the processing fees charged by some of the top banks in the UAE for Personal loans:

Bank

Processing Fee

Emirates Islamic Personal Finance for Expats

1%

RAKBANK Personal Loan

1%

Emirates NBD Personal Loan 

1% 

Dubai Islamic Bank Personal Loan

AED 1050

ADCB Personal Loan for Expats

1.05%

7. Repayment Period

The loan repayment tenure is also an important factor to consider before choosing a bank for availing a personal loan. Knowing the maximum term of the loan offered by the bank helps you plan your repayment schedule and finances. At the same time, it allows you to make a well-informed decision. Most banks in the UAE, like the Emirates NBD personal loan, have a maximum term of 4 years.

The aforementioned parameters help you evaluate the personal loan market in the UAE including the several perks offered by most banks. Take an educated decision about the best bank for personal loans based on your own financial requirements and do not settle for anything less than your dreams.