Personal Loan up to 8 times your Salary
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This can also be the reason for a high personal loan interest rate as compared to the interest rates on secured loans.
That said, applying for a personal loan in the UAE is indeed easy; however, getting this loan sanctioned and approved could be a challenging task.
The amount of loan approved depends ultimately on a number of factors. Your credit score and monthly income are usually the most important amongst them.
The reason for giving importance to your monthly income over other determinants is that the loan provider would want to make sure that you are capable enough to pay back your EMIs well on time, hence, removing the risk of defaults.
Apart from this, there are a few other reasons for considering the minimum salary requirement for personal loan a vital standard. Following are some of these reasons.
Another factor that the bank or lending institution usually consider before approving your personal loan is whether you have taken loans from any other banks or lenders too.
The bank or lender considers the amount of salary you earn monthly and how consistently you make salary transfers or if there is no salary transfer.
They also consider your DBR (Debt Burden Ratio) and your credit score.
Did you know?
A DBR (Debt Burden Ratio) is amongst the main eligibility requirement that an individual should be aware of before applying for a bank loan. DBR is simply the ratio of the current debt burden of an individual in percentage to his present income. It represents his commitments upon all his earnings.
There exists no standard income parameter for judging your loan suitability. There are chances that the lender will first of all check whether you have made any defaults in the past. They will also check whether you are servicing any kind of loan currently or not except the loan you have applied for.
Keep in mind:
The amount of personal loan you will be eligible to borrow is entirely on the discretion of the lending institution or the bank.
The lender carefully evaluates the monthly salary of the applicants of the loan as well as the growth potential in it before giving the loan approval. In maximum cases for a personal loan in the UAE, the individuals become eligible for a loan amount of around 20 times their monthly salary.
Moreover, so as to reduce the default risk, the lenders try to maintain the amount of EMI to around 45-60 percent of the monthly income.
For example, in case your monthly salary is within 20,000-25,000 dirhams, there are chances that the EMI amount would not be more than 12,500 dirhams, which is around 50 percent of your monthly salary.
While all these are general guiding principles for the lenders, make sure that you have maintained an attractive credit history and credit score.
Any case of previous default found may hamper your chances to get the desired amount of loan, or a suitable personal loan interest rate, or favorable loan tenure.
You are an expat with a monthly salary of 7,000 dirhams and you need a FAB personal loan. What would be EMI and total repayable amount?
Let’s say you need a loan of 70,000 dirhams. Now, your repayment tenure is 24 months and an annual rate of interest is 4.99 percent.
Your EMI would be 3,071 dirhams and the total repayment amount would be 73,696 dirhams.
Here is a checklist of salary-related documents required to apply for a personal loan in the UAE.
In a Nutshell
For a salary earner, a personal loan is the easiest way to make a bank finance their different requirements ranging from financing your dream vacation to your long-term investment needs. And all this without waiting to have a certain amount of savings.
However, for availing this personal loan facility, you need to meet the eligibility criteria as defined by the concerned bank. Amongst the various eligibility requirements, the most important is your minimum monthly salary.
Depending upon your income, the lender approves your loan amount, loan tenure, and the personal loan interest rate. The more is your income, the more would the scope of funds borrowing.