So you have been observing the used cars for sale for a while now and you have finally found a vehicle that is your dream car. Now after the inspection of the vehicle, it is time to figure out finances and pay for it.
There are two methods of payment: giving the whole amount in cash or financing it through the bank to have installment payment. More than 60% of the people in the UAE choose the installment method because it is affordable and practical. Read the following basics of car financing for Emirates before getting your car.
It is important to note that banks don’t support the finance of the whole value of the vehicle. The 20% down payment is required to give in advance. This sum can be offered directly to the bank
However, there are some banks that ask for the down payment to be managed in contact with the seller. This step is required before the bank initiates the remaining 80% financing for the car.
Monthly Basis Payment
Although the requirements for a minimum salary which is needed for the car loan are different in each UAE bank, it typically starts with AED 5000 to AED 8000. The monthly installments of the car loan should not be more than 50% of your salary and other loans such as credit cards.
For instance, if a person earns AED 15,000 each month, the monthly car loan installment should not be higher than AED 7500. Similarly, if there is any other debt presently such as AED 3000 each month, it will be eliminated from the monthly limit. You will not pay more than AED 4500 per month. Usually, the UAE banks count 5% of the credit card limit in the existing liabilities. This is only in the scenario of credit card loans.
Usually, the banks in the UAE offer to finance up to a certain amount. It is generally AED 24,000. This automatically means that that the car you are purchasing should have a minimum cost of AED 30,000 otherwise it can not be eligible for financing. From this AED 30,000, the 24,000 will be offered as a car loan as it accounts for 80% of the financing.
Applying for a car loan requires some documents for the process. This documentation is given to the lender which is listed as follows.
- Certificate of salary. It should be valid for a minimum of a month after the date of issue.
- Valid visa and passport. These are only required if you’re an expatriate.
- Driver license of the UAE
- In case you are a native, a valid passport and Idbara is needed from the UAE nationals.
- In case you are a free zone employee, a labor card or free zone ID is required.
- An evaluation certificate. This is needed for a used car but if you want to finance for a brand new car, a quotation is required from the showroom.
- The original Emirates ID
- Bank statements of 3 to 6 months. These statements should provide evidence of salary transfer. In case you are self-employed or an entrepreneur, the legal documents of the business are needed. Three months of personal bank statements and six months of company bank statements should also be submitted.
The age of the vehicle determines the maximum loan tenure of the car. For example, the maximum tenure of vehicles that are 3 years old is 60 months. But in case you are financing an even more old car, the loan tenure will be less.
Therefore remember to check the loan tenure of your desired car before you engage with the bank. You should be able to know if you can go along with the duration of the tenure and if it is feasible for your plans.
Now that you know the basics of automobile financing in UAE, you can easily contact the lender to have a car loan. The car valuation calculator should be referred to before finalizing the decision to finance the vehicle. CarSwitch is a great platform for getting used cars all over the UAE. You can view their website and see the collection of vehicles they boast.