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 UAE take additional
precautionary measures before sanctioning loans to reduce the possibility of an NPA
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
- Check your credit score before applying.
- Make sure you have a good credit score and credit report.
- Check whether your previous loan records are fair enough.
- Make sure you meet the eligibility criteria.
- Fill in the personal loan application form properly with appropriate
- Make sure all the details provided are right.
- There should be no errors in the bank loan application form.
- 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.
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.
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.
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.
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.
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.
EMI Calculator to
Calculate your Personal Loan Installments.
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 - There is a processing fee charged on a personal loan which ranges
from 1% - 2% of the loan amount at most of the banks in the UAE. This is also called as arrangement fees. Some banks
provided a discount on the processing fees. There will be a processing fee charged on loan top-up, loan transfer
from one bank to another bank.
- 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 - Apart from paying the EMIs of the loan regularly, if the
loan holder tends to pay some part of the loan amount as in partial settlement, 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.
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.
- 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%.
- You have a low credit score.
- Incorrect or incomplete personal information provided.
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.