Consumers usually turn to banks when in need of funds to finance their university education or to purchase their first home. However, increasingly, cash-strapped customers are taking out loans to cover other important needs. Meanwhile, banks in the UAE and abroad have been quick to recognize this trend and have launched a variety of unusual loan products to meet their demands.
[Compare personal loans in the UAE]
Loans for cosmetic surgery
Lebanon’s First National Bank has long offered plastic surgery loans that usually cover most operations. Set at a $500 minimum and $5,000 maximum, the loan does not require any down payment and allows the borrower to choose any medical facility and surgeon. The real advantage here is the ability to get a quick approval on the short-term loan (up to two years) upon submitting the required documents.
Oman’s Bank Muscat offers a similar ‘Health and Beauty’ finance scheme to its female customers, allowing them to borrow up to RA 25,000 ($65,000) at a low interest rate for plastic surgery, gym membership and beauty services.
[Related: Why banks reject personal loan applications | How to get a loan on a AED 5,000 salary or less]
Loans against gold and diamonds
More recently, banks in the UAE have begun to market loans that use jewelry and gold as collateral. Commercial Bank of Dubai (CBD) has a financing mechanism entitled ‘Loans and Diamonds’ in partnership with Rocks International. The product enables customers to use diamonds registered with DMCC’s Tradeflow platform as collateral for trade finance loans. The objective is to better facilitate the trading of diamonds through the quick and hassle-free financing.
Other financing schemes use gold as collateral for loan amounts which are set depending on the purity and weight of the gold. The gold is typically stored in a vault and returned upon the repayment of the loan.
[Related: Should you get personal loan insurance?]
Among these is Emirates Money’s ‘Loan Against Gold’ product. Funds can be used for business or personal needs at a maximum amount of AED 5 Million and are offered at relatively low interest rates. UAE Exchange offers its UK customers the option to apply for gold loans that cover one month and seven month terms at interest rates of between 2.75% to 3.99%. The loans are ideal for consumers faced with an emergency or are just in immediate need for cash. These ‘Gold Loans’ can also be used to top up a deposit to buy a home, pay for a holiday or even a car.
Loans for veterinary care
In other parts of the world, there are even loan products that cater to pet owners who are often faced with high veterinary bills. In the US, Karrot’s Pet Health Care loans provide fixed-rate financing at low interest rates comparable with credit cards and lenders. Applications can be done within a few minutes online and the customer can choose to have the money automatically deposited to their bank account. Approved customers also have the option to pay off their loan at any time during the term, without any penalties.
Loans for house rent
UAE banks have now also started offering shorter term loans specifically designed for paying house rents. With many landlords asking for a one check payment of the rental amount recently, this product could help meet the demand. Typically, these loans are of a 12 month tenure and the maximum loan amount offered is on the lower side. Examples of such products are the Union National Bank House Rent Loan and SimplyLife’s SimplyRental.