Souqalmal.com’s personal finance section allows you to compare personal finance products and personal loans in the UAE from banks in Dubai and Abu Dhabi and the other emirates.
Areas covered:
What should you know before comparing personal loans in the UAE?
Extending your personal loan
Consolidating your debts (refinancing)
Credit card or personal loan?
Is your employer not listed with UAE banks?
Loans for expats
Loans for UAE nationals
Loans for the self-employed
Islamic personal finance
What should you know before comparing personal loans in the UAE?
- Amount required: Each UAE bank has a maximum loan amount they will provide you. Once you know how much you need, make sure you compare loans where the maximum pay-out is higher than you need.
- Minimum salary requirement: Each UAE bank will impose a minimum salary they require you to earn in order to give you any loan. When you are looking to compare loans, try to select only ones with a minimum salary less than your monthly paycheck.
- Arrangement fees: This is a fee the bank charges you at the beginning of the loan and is clubbed together with your principal loan amount. Some of the arrangement fees on offer may be at zero percent interest, but they can also go up to AED 600 or two percent of your loan.
- Early settlement fee: If you are planning to take your personal loan for five years, but thinking of paying if off before then, the early settlement fee becomes an important factor in your decision. This is a fee imposed on you if you decide to pay off your loan early. Check the fine print as some of the offers on early settlement fees only apply if you settle in cash and not if you are refinancing.
- Flat and reducing rates: The rate is still considered one of the most important factors in a personal loan. But this is where there is the most confusion as well. A rate on a personal loan can be calculated in two ways – as a reducing rate or as a flat rate. A reducing rate is calculated on the outstanding balance of your loan, and a flat rate is calculated on the principal amount throughout the duration of your loan. So a loan at a reducing rate of eight percent is exactly the same as a loan at a flat rate of 4.41 percent (the general rule is you divide reducing by 1.813 to get the equivalent flat rate). So be careful when you compare rates as one bank maybe advertising a reducing rate loan and the other a flat rate loan. On Souqalmal.com, we calculate the equivalent for you for each loan, each time you search, so you get to compare apples with apples. [Related: Flat rate or reducing balance: 18% could be more expensive than 24% ]
- Salary transfer: UAE banks have different loan rates for customers who want to open an account and have their salaries transferred into that account from their employer every month, versus a customer who doesn’t transfer their salary. The bank will consider a customer who transfers their salary less risky and therefore generally offers them a lower rate. Some banks do not offer personal loans to customers who do not want to transfer their salary. You can search separately for ‘no salary transfer required’ on Souqalmal.com when comparing personal loans.
- Islamic or conventional: Are you looking for a personal finance that follows sharia law? On Souqalmal.com, you can search and compare all Islamic personal finance options in the UAE.
- Non-listed company: If your employer is not listed with a bank, it can make it more difficult for you to get a loan. We list banks lending to employees of non-listed companies.
Extending your personal loan
If you need to extend your personal loan, there are ways. You can contact your bank to see if they are happy to extend your current loan or you can have another bank buy out your loan, also known as refinancing. Make sure you understand any fees or charges applied to the loan if you get out early, such as early settlement fees.
Consolidating your debts (refinancing)
This allows you to merge all your debts into one loan. So, whether it is outstanding car or personal loans, maxed out credit cards or an overdraft, a bank will offer to merge these debts into one balance that you can then pay off with them. [Related: Consolidation loan may be the answer to your debt woes]
Credit card or personal loan?
You can draw money out from your credit card as a short-term and flexible borrowing solution or you can get personal finance for a longer-term and fixed solution. We compare the pros and cons for you in Credit card vs personal loan or finance.
Whatever the reason for taking out a personal loan, make sure you compare them, the rates, the early settlement fees and the arrangement fees. You may also want to look at the customer service level of the bank before taking on your personal loan.
Is your employer not listed with banks in the UAE?
Banks in the UAE offer thousands of financial products to customers; however, to take up any of these products there are a number of requirements that must be met. One of these is that the company you work for should be “approved or listed” by the bank. [Related: Does your company influence your credit-worthiness?]
Loans for expats
Not all loans are available to expats – some, particularly personal loans and home financing, are for nationals only, with different requirements for age, minimum salary and place of work. Souqalmal.com provides filters so you can search for loans appropriate for you as an Expat.
Loans for UAE nationals
Financial institutions have created loan products to suit the needs of local citizens, and Souqalmal.com provides filters so you can search for loans for nationals only. These loans mainly include mortgages and personal loans.
Minimum salary requirements may be lower than for expatriates. Banks will normally take account of any proven income beyond salary, such as rental income or sponsorship fees, meaning loan amounts may be higher than for expatriates.
Banks may have different requirements for age and employing company too.
If you work for the private sector, requirements for minimum employment period and eligible age may be higher compared to others working for the government sector.
In terms of fees, upfront fees may be as low as zero percent, with no early settlement fee, and there may be options for payment holidays.
Often, in order to access lower profit rates, you will have to transfer your salary.
Loans for the self-employed
It can be tricky securing a loan when you are self-employed in the UAE – you are not an SME and cannot therefore qualify for business finance… but nor do you have a salary certificate or guaranteed, fixed income, making you a risky proposition for the banks.
Thousands of people either own a business or work as contractors for another company in the UAE, making this a common problem – and not dissimilar to the issue of a salaried employee whose company is not listed with a bank.
This affects the professional self-employed too, such as doctors, accountants, engineers and architects.
Some banks offer different financing for the professionally self-employed, as well as different options for expats to UAE nationals who are self-employed.
There are banks willing to lend but with different ceiling limits, rates and tenures to that on offer with a salary certificate, so be sure to compare and shop around.
Islamic personal finance
There are many concepts banks use to provide personal finance. Using the Murabaha, the bank would normally buy the product and then re-sell the product to the customer at a higher price. The profit can be made in monthly installments and is referred to as the profit rate. Find out more in our guide to Islamic personal finance.