Taking an auto loan is the most popular way of financing a new car purchase in the UAE, and for good reason - car buyers can take advantage of extremely competitive interest rates making it a great option to buy your dream car.
But what do you need to consider when applying for finance, and how do you if you'll get approved?
Find out below.
Who will give me car finance in the UAE?
Any financial institution in the UAE can provide car finance. See the full list of banks that provide auto finance in the UAE below, or ask your local dealership if they have their own registered finance company which may also be able to help.
What do I need to pay up front?
The UAE Central Bank dictates that all buyers must pay 20% of the vehicle value as a downpayment, however some dealerships are able to offer assistance with this payment.
Click here if you would like us to have your chosen dealership contact you for more information.
How long will I have the loan for?
You can take car finance in the UAE for periods from 12-60 months (5 years) with most banks.
The length of the loan will be dependent on how much you are willing to pay back per month - the more you pay each month the shorter the overall term of the loan will be, and the less interest you will pay.
How much can I borrow as a car loan in the UAE?
Most banks offer loan amounts high enough to cover almost any new car purchase, so you need to base your calculations on your monthly salary.
Start by taking half of your monthly salary then subtract any existing monthly loan repayments from that figure.
Next, take 5% of all of your credit card maximum limits, and subtract that as well. The resulting figure is the maximum monthly amount you will be allowed to pay.
Multiply the result by 60 (the maximum term offered by most banks) to see the total amount you can afford. Note that you will need to take 3-4% off this figure to account for the interest you will pay on the loan.
Car Loan in the UAE Example:
|Half of Monthly Salary||7,500|
|Existing Personal Loan Repayment||1,200|
|5% of 1st Credit Card Limit (20,000 x 0.05)||1,000|
|5% of 2nd Credit Card Limit (25,000 x 0.05)||1,250|
|Maximum Monthly Installment||4,050|
|5 Year Loan Term||60|
|Maximum Loan Amount (before interest considered)||243,000|
What other conditions are there for me to take a car loan in the UAE?
Each bank has its own criteria for how it decides if it will approve a finance application in the UAE. See our list of all banks below with some of the conditions specific to each lender.
There are some exceptions to this, but in general you will need to satisfy the following criteria for car loan approval in the UAE:
What does my credit score need to be to have a finance application approved?
Your credit score is stored and calculated by the Al Etihad Credit Bureau (AECB), which is a Public Joint Stock Company wholly owned by the UAE Government. The AECB collects information from financial and non-financial institutions in the UAE such as banks, credit card providers, and government agencies such as DEWA to calculate your credit score.
Each car loan provider in the UAE will make its own decision on what credit score it deems acceptable, but you can use the following as a rough guide:
You can visit the AECB website here to find out your credit score. Please note it costs AED 31.50 for a basic credit score report.
What documents do I need to apply for car finance?
You will generally need the following documents to apply for car finance in the UAE.
Please note that requirements may differ slightly from bank to bank.
Are there any hidden costs I need to watch out for?
Most banks charge a 1% processing fee for new car loan applications in the UAE. This fee is calculated as a percentage of the loan amount and is usually capped at around AED 2,500 (although this varies from bank to bank).
Always ask your car finance loan provider for a copy of their fee schedule up front to avoid any surprises when you decide to commit to the loan.
We hope you have found this advice helpful! If there's anything else you would like to ask please contact us and we'll be happy to help.
Read on for a full list of car loan providers in the UAE.
See below the full list of car loan providers in the UAE.
We only list banks here, if you are interested in finding out if your local car dealership offers finance please make an enquiry and we will be in touch to help.
This list is in alphabetical order.
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