Need a Loan? 7 Types of Loans Services Available in the UAE

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Whether this is your first move overseas or you are a high net worth individual moving to the United Arab Emirates to further your career goals, good financial planning will make the move to the Gulf Coast a life-changing experience.

How you manage your money in the UAE will impact your future. Making the right financial decisions and using the right banking services will ensure you continue to expand your horizons internationally while you build a more secure financial future.

One essential banking service that can support your international banking needs is credit.

Credit is a powerful financial instrument that enables expats to achieve their financial goals overseas, and it can take many forms. For expats, the most common type of credit taken into consideration is a loan.

The loan option needed will depend on the individual’s financial situation and specific goals.

If you’re looking to apply for a UAE bank loan from one of the top banks in this part of the globe, then read on. Below, we list the seven most common types of loan services available to expats in the UAE.

1. Personal Loans

A relatively common credit instrument, a personal loan is generally used for personal expenses. This allows the borrower to use the funds at their discretion. There are two kinds of personal loans: secured and unsecured.

The main difference between a secured and unsecured loan is that collateral backs secured loans. This can be an asset that the borrower owns, from a house to a car.

The benefits of borrowing a personal loan in the UAE include:

  • Attractive interest rates
  • Ability to access up to 20 times the borrower’s monthly income
  • Flexible tenure
  • Installment deferment option
  • Minimum balance waiver
  • Cashback post disbursal option

2. Mortgage Loans

As homeownership is a considerable investment, many expats looking to buy property in the UAE will need to seek a mortgage loan.

A mortgage loan is a lending instrument used for the purchase of property or real estate. Mortgage loans are secured against the value of the property. Borrowers who fail to keep up with monthly repayments of the mortgage loan will enter the power of sale process.

The type of mortgage loan offered to a borrower is determined by eligibility and preference.

3. Home Financing

In most countries, mortgage loans and home financing have interchangeable definitions. In the UAE, this is not the case. Home financing in the UAE is a lending instrument that is Shariah-compliant Islamic financing.

Unlike traditional financing, Shariah-compliant home financing prohibits charging interest on the loan.

Rather, the lender buys the residential property and sells it to the borrower at a profit. The profit accrued by the lender would be equivalent to interest on a traditional mortgage loan. Any UAE resident, including an expatriate, is eligible for Shariah-compliant financing.

4. Auto Loans

As vehicles are essential to getting around in the UAE, taking out a car loan is often unavoidable.

Fortunately, there are various auto loan options tailored to meet different financial goals. Many auto loans in the UAE offer borrowers high loan amounts, competitive pricing, and flexible terms.

UAE auto loans can be used for the purchase of both new and used vehicles for the purpose of personal use. Eligibility is determined by the borrower’s salary and age.

5. Auto Financing

Like home financing, auto financing in the UAE follows a Sharia-compliant structure. Auto financing is based on the Murabaha model. The Islamic loan structure of Murabaha is a cost-plus financing loan. It is not an interest-bearing loan, but rather, a profit markup.

Competitive profit rates, flexible payment plans, and a high finance amount make Murabaha auto financing a viable option for expatriates looking to drive away with their vehicle of choice.

Eligibility is subject to the lender’s approval criteria.

6. Debt Consolidation Loans

A debt consolidation loan is often reserved for borrowers with several unsecured debts. These unsecured debts can be anything from liabilities to consumer debts. A consolidated loan combines multiple debts into one simple monthly payment.

Borrowers will often consolidate their debt into one financing instrument because of its favorable payoff terms. There are several advantages of consolidating multiple debts into one simple loan.

The most common benefits are:

  • Competitive interest rates
  • High loan amount according to eligibility
  • Cashback option
  • Availability of additional loan/financing
  • Installment deferment option

7. Startup Loans

Are you moving to the United Arab Emirates in pursuit of a new venture? Then accessing financial support is essential. A great financial instrument to help support your new venture in the UAE is a startup loan.

This type of financial support enables an entrepreneur to inject much-needed capital into a new startup business.

While conditions are strict, as long as the entrepreneur has a near-immaculate credit score, obtaining a startup loan is not extremely difficult. Some advantages of a startup loan include lucrative interest rates, customizable repayment methods, and generous loan amounts.

Money Matters

Living in a new country presents unique opportunities, but also certain challenges. An array of lending options exist for expatriates in the UAE. Don’t let your financial ambitions face a tumultuous journey; make sure to strategically access the right lending instruments for your individual needs.

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