Car finance and auto loans in Dubai, Abu Dhabi, UAE
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Car and auto loans in Dubai and UAE, finance, hire purchase, bank loans for motorcycles, boats, and other vehicles, paying off a car loan and other information.
Arranging a car loan in Dubai
There are normally two places you'll go to get finance - the car dealer (whether second hand or new), or directly from a bank. If you arrange financing from the dealer, you'll be getting money from a bank or financial institute anyway but sometimes you get a better deal, and probably better service. Other possibilities include, borrowing money from friends or family, borrowing from a loan shark, or stealing money. None of those alternatives are recommended.
There are then two types of loan arrangements. One is a car finance or auto finance loan where the bank owns the car for the length of the loan, the other is a personal loan where you own the car.
There are also two types of financing - Islamic or Sharia compliant financing where you don't pay interest as such since the payment of interest is 'Haram' (forbidden) according to Islam, and non-Sharia loans where you do pay interest. Islamic financing is not the same as getting an interest-free or 0% interest rate loan. What happens is that the financing institution buys the car (or anything else being financed) and sells it to you for a higher price which you repay in monthly payments.
Car loans are generally for 2, 3, or 4 years (24, 36, 48 months). Occasionally loans for up to 5 years or longer are available (Amanah Islamic finance from HSBC goes to 7 years). Personal loans are mostly for 1-5 years.
You can buy a second hand car with vehicle finance but there is an age limit of 3-5 years depending on the bank or finance institute - probably because cars older than 5 years are difficult to get comprehensive insurance for. For an old banger, you'll have to get a personal loan. Interest rates are higher for a second hand car than a new car, and even higher for a personal loan.
Car loans do not usually require you to have a salary transfer to the bank. Personal loans do, although it might be possible to find a personal loan without a salary transfer requirement.
You'll need something like (originals and copies):
There's always a special offer on car finance around somewhere. Some examples:
Terms and Conditions
Always read the small print. Things to watch out for are:
Extra details that may trip you up with a car loan (these don't apply with personal loans):
Best banks for car loans in Dubai and the UAE
This is not necessarily a list of highly recommended banks - in Dubai it seems like all banks will annoy their customers sooner or later. Just be patient and wait your turn if you think you're being treated too well. Often you'll be better off if you either go through the car dealer since they have a vested interest in loan arrangements being arranged efficiently, or through some sort of liason between the company where you are employed and a bank they deal with.
Last update Sunday 08-Jun-2014.