Getting a personal loan in Dubai is a straightforward and expedient process if you have the necessary paperwork and can demonstrate that you satisfy the bank’s specific requirements.
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Bear in mind, however, that financial institutions have the discretion to turn down your application even if it satisfies all requirements. They are not required to provide you with a rationale for their decision.
Even though the requirements could be slightly varied from one bank to the next, there are a few papers and needs that are very standard and are requested by the vast majority of financial institutions.
In the following paragraphs, we will walk you through each step of getting a personal loan in Dubai, United Arab Emirates.
Required Documents:
The following documents are the primary prerequisites that banks in UAE will often ask for. However, the specific documents required to open an account may vary from one bank to another.
- Salary Certificate
- Bank Statement (3–6 months)
- Emirates ID (both pages)
- Resident Visa
- Passport
- Trade License (for companies only)
- Personal Loan Application
What is the Maximum Amount I Can Get for a Personal Loan in Dubai?
According to the Central Bank of the UAE, the most that a bank is allowed to lend to an individual is twenty times that individual’s monthly salary. If your monthly income is AED 15,000, for instance, the most that you may borrow in terms of a personal loan would be AED 300,000.
But that’s not the end of it. According to the regulations set forth by the Central Bank of the UAE, the applicant’s total monthly obligations, including payments on loans and debts, must not exceed fifty percent of their total monthly income.
For illustration’s sake, let’s say you had a monthly car payment of AED 3,000, a personal loan application, and an income of AED 10,000. In this scenario, your personal loan application would be denied. If this is the case, the bank will only be able to give you a limited amount (assuming you have satisfied the requirements) such that the monthly payment for the personal loan will not be more than AED 2,000 per month. This will ensure that the combined car and personal loan payments will not exceed 50% of your income.
Repayment Period:
The typical repayment time for personal loans in Dubai might be anywhere from one to four years. You can apply for a loan with a term lasting anywhere from one to four years.
What happens if I default on paying a loan in the UAE?
When an individual applies to a bank for a personal loan, the bank may request that the applicant present a check to the bank as a form of collateral for the amount of the loan.
It is possible that you will be judged to have defaulted on your personal loan if you fail to pay three consecutive installments of your personal loan installments or six installments that are not consecutive.
The bank will present the check in the event of a default, but there is a good chance that it will be returned unpaid. This is due to the fact that the primary reason a person stops paying their installments is that they do not have enough money in their account.
When your check is returned to the bank as unpaid, the bank will initiate legal action against you. You will not be arrested for having a bounced check because the law reclassified it as a civil offense in 2020. However, you will be required to pay significant fines before being arrested for the offense. Previously, having a bounced check was considered a criminal offense. This will no longer be the case.
A travel ban might be imposed on you if the bank filed a police case against you while you were in the UAE because the immigration and police departments are tied closely with one another.
If you went back to your home country or any other nation before the bank filed a police case against you, you would not be permitted to return to the UAE until you have settled your debt and received the police clearance letter. This would be the case even if you went back before the bank filed the case. In addition, the legal action that the bank has taken may have consequences for you in any nation in which you currently reside.
Always be sure to contact your bank, explain your circumstances to them, ask for a debt rescheduling, and set up another payment plan. This is a highly advised step to take. In the end, banks are interested in getting their money back. Therefore, you can bet that they will be open to discussions.
However, working with an attorney to resolve the issue is almost always preferable to attempting to resolve it on your own. Your attorney will speak on your behalf with the bank or other financial institutions and advise you on the most effective strategy to resolve this matter.
Can I Get a Personal Loan if My Company is Not Listed with the Bank?
In the UAE, the banks typically list only medium-to-large enterprises on their stock exchanges. When you work for a company listed with the bank, getting a personal loan in Dubai is facilitated. However, this does not necessarily indicate that you will be unable to get a personal loan from the bank even if your business is not listed with them. Personal loans for workers at non-publicly traded companies can still be obtained from banks. However, lending institutions now do more extensive credit checks. In addition to this, they have to verify that you have maintained a consistent income over the course of the previous time period.
Check your Credit Score before Applying for a Personal Loan:
Al Etihad Credit Bureau is responsible for keeping track of the credit score in the UAE (AECB). It is determined by looking at many aspects of the individual’s credit history, including the length of time they have had credit, the amount of debt they have, the age of their credit accounts, and the number of credit accounts they have.
If you want to check your credit score, you must log in to AECB.gov.ae and get your credit report and credit score. After completing the required steps (registering your information, providing your Emirates ID and passport number, and making the payment), the report will be emailed to you within a few minutes. The following is a breakdown of the costs associated with checking a credit score.
How to Improve Your Credit Score in the UAE?
The credit score is constantly changing, and several straightforward activities may be undertaken to improve it.
- Pay your monthly bills on time.
- Reduce the number of credit cards you have.
- Reduce your outstanding debts as much as possible.