Debt Consolidations loans in UAE

Debt Consolidation in UAE

In recent times, many debtors are juggling between many loans like home loan, car loan, personal loans and credit cards. The high cost of living, especially in the UAE region and the upscale lifestyle causes people to spend beyond their means. When the debt goes beyond control, they approach banks or financial institutions for a debt consolidation loan.

What is Debt Consolidation Loan?

Imagine managing 3-4 loans and paying different installments for each one of them. These loans can be different rates of interest and also with different banks. Debt consolidation loan is a product offered by most banks and financial institutions which help consolidate all your loans into one single loan. The tenure, rate of interest and benefits can vary but the consumers believe it helps them begin their journey of a debt-free life.

Benefits

• Better tracking of finances – Since you have only one loan to repay, the number of installments come down to one too. This saves you a lot of time, effort, and money, involved in making multiple payments. This way you can track your loan components like interest rate being charged, etc easily. 
• Manage debts easily -  Having multiple loans can be a little confusing. A single loan can be managed easily and the payments can be done on time without any delays. 
• Lesser interest to be paid– Usually, banks and financial institutions offering debt consolidation loans offer a lower rate of interest. So, by consolidating various loans, you can be assured of saving money which was being paid as interest. 
• Less percentage of Debt repayment amount on monthly expenses - Low interest rate will indeed reduce the monthly payment made on the debts which can save the loan holder a significant amount of money.  
• Credit rating– When you are juggling between multiple payments for different loans, chances are that you might miss or delay certain installments. This can adversely affect your credit rating and cause problems for availing further loans if required. Debt consolidation loans helps you by reducing the chances of missing or delaying payments thereby improving your credit score.
• Stress-free- We live in a world full of stress. A loan is probably the biggest contributor to stress in our lives. By consolidating your debts you will feel a drop in your stress levels since all your installments would be merged into a single payment every month.
• Additional benefits- Along with these banks might offer benefits like free postponement of installments, grace period for installment payments, discounts on processing fees, etc.   
• Quick repayment- You can pay off your loan faster as you have quick access to funds. 
• Bill Management- By Debt consolidation you have very few loans to payoff and you have lesser bills to manage. 

Eligibility

Every bank and financial institution have its own eligibility criteria which needs to be checked individually. However, some basic requirements are as follows:

• Debt to Burden ratio [DBR] should not exceed 50 percent
• Most banks have a requirement of salary transfer
• Minimum salary starts at AED 7000
• Must be a UAE resident 
• Should have loans in UAE to consolidate 

Fees and charges are usually similar to normal personal loans but they must be checked before applying.

Which banks offer debt consolidation loans in UAE?

Abu Dhabi Islamic Bank [ADIB] Debt Consolidation Loan

Features

Take advantage of ADIB Debt Settlement and enjoy a 7-month grace period before your first installment payment.

• Up to 210-day grace period for your first installment payment
• Free pre-approved Cashback Visa Covered Card
• Up to 2 installment postponements per year
• Optional comprehensive personal finance Takaful coverage for outstanding balances up to 2.5 million

Emirates NBD Debt Consolidation Loan

Features

• Simply lighten your financial payments with our One Pay facility
• Streamline your loan and credit card payments with our simple and effective solution. Reduce your monthly payments and eliminate the hassle of managing multiple accounts.
• Enjoy preferential interest rates
• One manageable payment plan for all your existing debts
• One single monthly payment for your convenience

First Abu Dhabi Bank[FAB] Debt Consolidation Loan

Features

• Long repayment period is provided
• Interest rates start from 5.12% 
• Only UAE nationals are eligible
• Salary transfer to FAB account is mandatory

Standard Chartered Debt Consolidation

Features

• Residents of the UAE who are currently employed by companies that have been approved by Standard Chartered.
• Take advantage of our competitive interest/profit rates, starting from as low as 7.05% p.a., and gain better control over your finances. 
• The Bank also offer flexible monthly repayment
• schedules ranging from one to four years. 
• Top Up Loan Installment Deferment Option 

Emirates Islamic Finance Consolidation

Features

• Emirates Islamic offers a convenient solution to simplify your financial commitments.
• With our Personal Finance, you can consolidate all your obligations into a single, manageable monthly installment.
• Enjoy Competitive profit rates
• Financing up to AED 2 million
• Flexible repayment with the first installment due within 90 days
• Minimum salary requirement of AED 10,000
• Complimentary Takaful coverage
• Easy documentation process

Mashreq Bank Debt Consolidation Loan

Features

• Lower monthly payments
• Higher Loan amount – AED 1 Million for Expats and AED 3 Million for UAE Nationals
• Maximum repayment tenure of up to 48 months
• Salary transfer is mandatory 

You will also have to prove that your outstanding credit was granted before May 2011 and your DBR is higher than 50 percent of your monthly salary.

Debt consolidation is a tool to help you get your loans under control. It can help you minimize the number of installments and in certain cases reduce the interest rates too. However, it does not make your debt disappear. You have to repay what you have borrowed and with 100 percent dedication, you can use this tool to reach a debt free existence.

Documents Required

• Liability Letter
• Salary Transfer Letter as per the bank's format 
• Last 3 - 6 months bank Statements 
• Completed and signed branch application form
• Passport Copy 
• Valid Emirates ID
• Residence Visa(only for expats)
• Any other documents as requested by the bank

How to know that Debt consolidation loan will work for you?

Debt consolidation is a long drawn process. Consumers with multiple credit cards and no savings to repay them should primarily consider debt consolidation as this can significantly reduce the interest rates. Debt consolidation requires an unwavering commitment to new repayment structure and persistence to follow it throughout the tenure of the loan. If this is you, then debt consolidation loan can help you become debt-free.

Remember: if you start taking more loans/credit cards, then debt consolidation will not work for you.