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In simple terms, personal finance is a draw down on the incomes of the future. It comes with a great responsibility for making repayment according to the terms mentioned in the loan contract with the banks.
Have you been wondering how much amount would you be eligible to apply for in UAE?
It is best for you to know the maximum amount you are capable of securing as loan before making a huge financial commitment. Here we have shed some light on the rules and regulations governing your eligibility for this finance and the things you should be doing before you submit your application for the loan.
As per the regulations by the Central Bank of UAE, banks are not allowed to offer a personal loan in UAE of more than 20 times the monthly salary of an individual. Hence, if you are earning 10,000 dirhams in a month, the maximum finance amount you can qualify for is 200,000 dirhams
However, this does not end here. The maximum personal loan amount that you can apply for is also based on your DBR (Debt Burden Ratio). The UAE Central Bank has made it mandatory for a resident of UAE to have DBR that does not exceed 50 percent.
What this means is that the combined installment per month on your existing loans must not be more than 50 percent of your monthly salary. Therefore, if you are earning a salary of 10,000 dirhams monthly, you should not make a repayment of more than 5,000 dirhams on the monthly installment of your debts.
Before heading to the banks, we advise you to do a bit of homework, so that you know the exact amount of finance you can and you must apply for.
The first and foremost step is checking your DBR. Are you wondering how you can calculate it? It is as easy as it can get. Check all your loan installments existing in a month and make a note of them.
In case you hold one or more than one credit cards, take an account of five percent of the total credit limit on each of the card. Make a total of all these amounts and then divide it by your monthly salary for arriving at the percentage of your DBR.
With the credit reporting launching in the Emirates, it has become easy for the banks to review the history of your debts. This includes the amount you owe already, the number of repayments you have missed, and much more.
In case you already have an existing loan and a credit card or have made a repayment on your loan or credit card earlier, the best thing to do is checking your credit rating before applying for another finance. Review your report to check if all the repayments made in the past have been updated correctly or not.
In case there is something missing on the report, you can end-up being offered a more-than-average rate of interest and a lower loan amount as opposed to what you would have qualified for ideally.
Majority of the banks in the UAE offer two main variants of personal finance, one is where you have to necessarily transfer your salary to the lender, and the other one is where there is no requirement for salary transfer.
In case you opt for the option of salary transfer loan, you will not just be able to enjoy a much lesser rate of interest, but will probably be able to secure the maximum amount of loan that the bank offers.
A few banks or lenders provide you with an option of applying for finance with a co-applicant. This may help you to increase your eligibility for the loan, by considering the salary of your co-applicant too.
The co-applicant can be your close family member or spouse. This personal finance option can prove to be a suitable one if you earn a low income, have a less-than-excellent credit history, or have existing debts, which have reduced your capacity of borrowing.
In a Nutshell!
The lack of knowledge of the eligibility of finance, excessive borrowings, making use of multiple channels of debts has seen many people getting stuck into debt traps.
The regulations that the UAE Central Bank has introduced in the recent years and the system of credit scores of Etihad Credit Bureau have proved to be an effective check on those individuals who borrow excessively on their future incomes.
These regulations also help you to know the maximum loan amount you can avail in the Emirate of Dubai and about the various other factors involved that help you to apply personal loan online easily.