There are many occasions when a person finds himself facing a shortage of money or in need of some extra funds/Loans. For example while getting married, buying a new house or car, paying university bills or spending money on a home renovation project. You cannot always depend on savings and in such a case you might need to borrow from a bank.
Every loan candidate has their own specific requirements and a loan that may be suitable for one person might not work out favorably for another.
That is why it is good to have some basic information about the various kinds of loans that can be availed in UAE.
Major types of loans in UAE:
Salary transfer loan:
In this type of financial arrangement, the bank requires the candidates to have their salary deposited in the bank and the installments are deducted directly from the borrower’s salary. A benefit is that it offers a lower interest rate but there is a lot of extensive documentation involved as the applicant has to seek prior permission from their employers.
Non-salary transfer/ Personal loan:
This does not involve any salary transfer but it has a comparatively higher interest rate.
Credit card loan:
It is a convenient mode of borrowing money but it has a high interest rate. Credit card loan
Shariah-compliant:
Many banks in UAE offer Islamic loans such as Dubai Islamic bank, Mashreq bank, Emirates Islamic bank, etc. The finance products are supervised by independent Sharia supervisory boards.
Documents required for applying:
Different banks have different requirements for documentation but usually applicants need these basic documents to apply for loans:
- UAE national identity card
- Visa documentation
- Valid residency visa in case the candidate is an expat.
- In case of salary transfer loan, banks ask for salary transfer agreement letter
- Income statement
- Post-dated cheques as security in some cases
Usual criteria:
Banks also look for certain criteria in applicants to ascertain that they are suitable candidates:
- Minimum monthly salary criteria for various loans
- Upper and lower age limits
- Financial or credit history to determine if the person will be able to repay the loan.
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