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UAE has been experiencing a steady rise in the banking sector in recent times. With over 40 banks (domestic + foreign), customers have a range of options to choose from. Islamic banking, where banks cannot charge fixed interest either on loans or deposits, has been operational for at least three decades now. Also, with the Dirham being pegged to the USD, foreign banks play an important role in setting the interest rates. With a huge amount of expatriate population, banks in the UAE take additional precautionary measures before sanctioning loans to reduce the possibility of an NPA (Non-Performing-Asset).
Tips to get your personal finance in UAE approved
A personal loan is recommended only to fulfill emergency financial needs. So when you apply for one, it
is important to make sure it gets approved without any complications. Banks approve the personal loan
quickly if the applicant fits into their eligibility criteria perfectly and all the documents provided
are valid. Check these tips to get your personal loan approved
Have a good credit score
Check whether your previous loan records are fair enough.
Make sure you meet the eligibility criteria of the loan.
Fill in the personal loan application form without any errors.
Have a stable job i.e you must be working in your current
organization for more than a year.
Avoid applying at various banks at the same time.
Have all the required documents ready without missing out on
Don’t apply for a loan amount beyond your capability or requirement.
Check and make sure your debt to burden ratio (DBR) is less than 50%.
Ensure you have not got any other loan in the past 6 months as this
will increase your DBR.
Personal Loan application rejection
There can be multiple reasons and it can help if you spend time understanding the eligibility
requirement before applying for a bank loan. Some common reasons are:
Salary requirement not met.
The company you work for is not listed with the bank.
You have a low credit score.
Incorrect or incomplete personal information provided.
Your Debt-to-Burden Ratio (DBR) is very high. In simple words, the
percentage of your income being used to repay all your debts is more than 50%.
Banks don’t usually disclose the reason behind rejection. Following the basic hygiene of submitting a
completed and correct application, checking your credit score and eligibility and clearing existing
debts can ensure that you maximize the chances of your application being approved.
Benefits of Personal Loan
UAE offers a host of benefits for people availing Personal Finance. Let’s look at a few of them:
Different options available for salaried and self-employed
Many banks in UAE offer free debit cards and credit cards to the
personal loan holders.
Few banks offer payment-free period for the first few months. The
instalments start after the end of this grace period.
Personal loan holders can avail Repayments holiday facility i.e can
skip installments payment for 1-2 months.
You can opt for an insurance cover for your loan to hedge against
Personal loans compliant with the Islamic laws are available with
most of the banks in the UAE.
Top-up options are available in proportion to the increase in
Takaful coverage is available on Personal loans in UAE which offers
financial security in case of disability or death of the individual.
Features of a Personal Loan in UAE
Both UAE Nationals and Expats can avail personal finance in UAE.
The maximum finance provided is AED 5 Million.
The personal loan interest rate in UAE depends on your income and
the loan amount. It can start from 3.99% p.a. (reducing) or 2.19% p.a. (fixed) which varies with
The minimum salary requirement to avail a Personal Finance in UAE is
Majority banks provide loan amount based on the applicant’s your
gross monthly salary.
The tenure of the bank loan can stretch up to 48 months (4 years).
1% of the approved loan amount is charged as processing fees at most
of the banks.
1% of the outstanding loan amount is charged as early settlement
Can settle loan partially on paying partial settlement fees.
Eligibility for Personal Loan in UAE
Every bank has its own eligibility criteria which needs to be checked individually. However, some basic
requirements are as follows:
Only UAE residents are eligible.
Loan applicant must be at least 21 years of age.
Both Salaried and Self employed individuals are eligible.
Salaried individuals must be currently employed and working for
around one-to-six months minimum (varies from bank to bank).
Minimum salary must be around AED 3,000 (again each bank has its own
You must pay back the bank loan before you turn 65 years (for
expatriates) and 60 years (for UAE Nationals).
At most of the banks, employment company must be listed with them.
Salary transfer criterion depends on the bank and loan type.
Documents required for Personal Loan in UAE
Like eligibility, documentations can also vary from bank to bank. Some basic documents needed are:
Bank loan application form(Provided at the banks).
Identity proofs like Emirates ID, Driving licence etc. for
For Expatriates – Valid Passport with a valid UAE residence Visa.
Salary certificate and/or salary transfer letter.
Latest 3-6 months Statement(s) of your bank account(s) where salary
For self-employed individuals – Trade License.
Flat and reducing rates?
It’s important that you understand the difference between these to make a comparison and choose what is
best for you. Let’s look at both with an example:
Mr. X takes a personal loan in UAE of AED 100,000 for a tenure of 5 years. For example, let’s assume
that the rate of interest is 10% p.a. for both flat and reducing options. The payback calculation would
look as follows:
Flat Rate of Interest
Amount to be paid per year
As shown above, Mr. X will end up paying AED 150,000 over the tenure of 5 years if he opts for the flat
rate of interest.
Reducing Rate of Interest
Amount to be paid per year
As shown above, Mr. X will pay only AED 131,899 if he chooses the reducing interest rate option.
Please note that this example is purely for explaining the difference
between the interest rates and not an indicator of the market. Choose the interest rate that best
suits your needs by talking to a financial advisor.
Apart from the eligibility criteria, interest rates, personal loan applicants must look into other components as well,
like fees and charges on the personal loan. There are few fees and charges levied on a personal loan.
Processing Fees - The Processing fee/ arrangement fee charged on a personal loan ranges
from 1% - 2% of the loan amount at most of the banks in the UAE. Some banks provided a discount on the processing fees.
Early Settlement Fees - If the personal loan holder clears the loan before the end of
the tenure, then an early settlement or pre-settlement fee will be charged. This ranges from 1%-3% of the loan
Partial Settlement Fees - The
loan holder can some part of the loan amount as in partial settlement and there will be 1% - 3% of the loan
settlement amount charged as partial settlement fee. Some of the banks in the UAE provide at least one free partial
settlement facility per annum.
Late Payment Fees - If the personal loan holder does not pay the loan installment
before the installment due date, then there will be a late payment fee charged. In the UAE, the minimum late payment
fee charged is AED 50.
Credit Life Insurance Charges - A credit life insurance charge of a minimum of 1% is
charged. This is to secure the loan amount if anything happens to the loan holder. This is mandatory at some banks
and optional at some.
Loan Rescheduling Fees - Personal loan holders can reschedule their loan tenure on
paying a loan rescheduling fees which starts from AED 250.
Loan Cancellation Fees - If the loan applicant cancels the loan after approval, there
will be a cancellation fee charged which starts at AED 100.
Liability/ No Liability Letter - Banks offer a liability/no liability letter to their
loan holders. A minimum of AED 50 is charged for the liability or No liability letter.
Components to compare while getting a personal loan
There are several banks in the UAE that provide personal loans. So to pick one bank amongst various others
good comparison. There are certain components to be compared while getting a personal loan, like
Interest rates - The first and foremost thing to be compared in different
loan products is the interest rates. Not all banks provide loans on the same interest rates. Check which
offer you a personal loan with low-interest rates comparatively. High-interest rate loans can end you up
more than what you have borrowed. So compare interest rates on different loan products.
Loan tenure - The loan tenure on a personal loan must be compared along
interest rates. In some cases, a high-interest loan with low tenure can be beneficial or similar to the
one with a
low-interest rate and longer tenure one. The loan holder must check the tenure and interest rate and
EMI of the personal loan before picking up a product.
Monthly installment - As said, the personal loan applicant must calculate
EMI and check how much he will be going to pay monthly. If he can afford the high monthly payments on a
tenure and save money on interest rates, then he can pick the right one.
Processing fees - The processing fees on personal loan in UAE is a
minimum of 1%.
Some banks provide a discount on the processing/arrangement fees. It can also be a limited period discount. Loan applicants must
pick the one that offers the lowest processing fees.
Early settlement fees - Not all the banks charge fees for the early
settlement of the
loan. Find the ones that offer discounts on early settlement fees or provide any free partial settlement
Additional fees - Compare other fees and charges levied on the loan and
apply for the
one which is best for you.
Other perks - Banks also offer perks like a free debit card or credit
card on the
personal loan or discounts on the fees like pre-payment fees or early settlement fees, etc. These can be
advantage for the applicant. So check if you can get any extra perks from the loan.
Application process - There are two ways to apply for a personal loan in
online or visit the bank personally. See which can be beneficial for you to finish the process by
and save time or visit the bank for a detailed study and apply.
⭐ Do I have to take an insurance on my Personal finance?
A. Banks, usually provide an insurance cover on a personal finance. If not, then it is
advisable to take an insurance to hedge against the risk of being unable to pay back due to
illness, disability or death.
⭐ What is an early settlement fee?
A. If you wish to pay off your loan before the end of the stipulated tenure, then banks
usually charge an ‘early settlement fee’. The UAE Central Bank has capped the early repayment
fee at 1% of the outstanding loan amount.
⭐ What if another bank is offering lower rate of interest? Can I transfer my loan to that bank?
A. Yes. However, you must check this with the bank before you avail a loan. It is better
to be clear about these policies than repent it later.
⭐ Do banks provide loan if the company is not listed?
A. Yes, Some banks in UAE like Citibank, Emirates NBD, DIB, ADCB etc., provide loans even
if the company is not listed with them. But in such cases low or high interest rates are charged
on the loan amount provided.
⭐ What can I use a Personal Loan for?
A. A Personal loan can be used for any personal purpose. Whether it is marriage or travel
or home-improvement, you can use it however you want.
⭐ What is processing fees?
A. There is some fees charged on processing the loan application, known as “Processing
fees”. The processing fees charged is 1% of the loan amount approved.
⭐ How do I know my credit score?
A. You can visit nearest branch of AECB along with the identity proofs and get a hard
copy of your credit report.
⭐ Can I apply for a bank loan in Dubai, if my first attempt gets rejected?
A. Yes, you can apply for a personal loan at another bank if you meet the eligibility
⭐ What is the credit score range to be eligible for a bank loan in Dubai?
A. The minimum credit score is 300 and the maximum is 900, if the applicant’s credit
score is below 580 then he is not eligible for a personal loan in UAE.
⭐ What is the maximum DBR to be eligible for a personal loan?
A. If the loan applicant’s Debt to Burden ratio is more than 50% then there are higher
chances of loan application getting rejected. Calculate your Debt to Burden Ratio using ourDBR
⭐ Can i get a personal loan in Dubai without salary transfer?
A. There are many banks in UAE like DIB, Emirates NBD, ADCB, FAB, etc., providing
personal loan without salary transfer.
⭐ Can I get a personal loan without salary certificate?
A. No, salary certificate is a mandatory document for salaried individuals in UAE to get
a personal loan.
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