Your Guide To Applying For A Personal Loan In UAE

Loans are often necessary for various reasons like purchasing a car, paying school fees, consolidate debts or managing unforeseen costs. To pay off such expenses, one takes a personal loan. A personal loan is an amount of money you borrow for different purposes and is available from banks. Over time, you repay the borrowed money with interest, which varies from bank to bank. With that said, if you are planning to take a personal loan, and want to understand the process, and documents needed, Connector is here with its guide to help you understand this better. 

What Are The Conditions To Apply For A Personal Loan In UAE 

When applying for loans, including personal loans, there are specific criteria you must meet to qualify. In the UAE also, you need to fulfil certain conditions to apply for a personal loan. Let's explore these criteria, keeping in mind that they may vary slightly from one bank to another.

• You need to be a UAE national or resident, requiring a valid passport with a UAE residence visa and Emirates ID.
• Age eligibility is between 21 to 65 years.
• Holding a current account with an authorised UAE bank is mandatory.
• Your minimum monthly salary should range from Dhs 3,000 to Dhs 10,000.
• You must be a confirmed employee or have worked at your current company for more than six months.
• As per the Central Bank of the UAE, individuals are eligible to seek a personal loan backed by their salary, end-of-service benefits, or any consistent income from a clearly defined origin.
• Banks ask for a credit score to review any current loans and check the applicant's borrowing history. A higher credit score indicates the borrower's ability to repay the loan.

While these are the basic conditions, some banks may also prioritise offering loans to individuals employed by companies affiliated with them. If your employer isn't on a bank's approved list, obtaining a loan in the UAE might be more difficult. If you're unsure whether your company is listed, you can enquire with your HR department or contact the bank directly for confirmation.

Rules That Both Loan Seekers and Banks Should Keep In Mind

• Personal loans in the UAE are limited to 20 times the borrower's salary. 
• Borrowers usually have 48 months to repay the loan, with monthly deductions capped at half their salary.
• Some banks may offer loans up to Dh5 million, subject to their policies and customer eligibility.
• If a loan or a banking facility's repayment period extends to the retirement age of the person, banks and finance companies must adjust the repayment schedule so that only 30% of the income or pension salary is deducted.

How Can You Apply For A Personal Loan In The UAE

Before applying for a loan, it's crucial to engage in financial planning to assess your need for the loan and devise a repayment strategy. Once you've completed this step, begin your research. Start by selecting a bank and reviewing its monthly instalment plans. Determine the amount you can borrow based on your preferences. Then, either visit the bank or apply for the loan online. Here's a breakdown of the steps involved:

Applying through a bank branch:

1. Visit your chosen bank branch.
2. Complete the personal loan application form.
3. Seek assistance from a bank representative for details on interest rates and other factors.

Applying through the online portal:

1. Use online portals to compare offers quickly.
2. Utilise the personal loan easy monthly instalments calculator for guidance.
3. Compare, research and analyse to find the lowest personal loan interest rate in the UAE.

Documents You Need To Submit While Apply For A Personal Loan 

The bank requires the following documents to process your loan. If you don’t have any of them, or if you have any questions, the bank will help you with queries. Documents required for personal loan processing:

1. Application Form: Complete the personal loan application form provided by the bank.
2. ID Proof: Present a valid passport, UAE residency visa, and Emirates ID as proof of identity.
3. Residency Proof: Provide documentation confirming residency in the UAE.
4. Bank Statement: Provide bank statements from the last 3 to 6 months to demonstrate financial stability.
5. Salary Certificate: Submit your latest salary certificate as proof of income.
6. Security Cheque: Some banks may require a security cheque for loan processing.
7. Additional Documentation: Depending on the bank's requirements, you may need to provide staff ID, labour card, or work ID, as well as a salary transfer letter if applicable.

How Will You Receive The Funds Once Your Loan Is Approved?

Once the fees and charges are deducted, the loan amount will be deposited into your bank account. If you have multiple accounts with the bank, the loan amount will be credited to the one specified in your application. 

For loans from a bank where you don't have an account, the amount will be issued as a manager’s cheque (a cheque issued by the bank drawn upon itself and can be encashed by the bearer) to your account at another local bank.