Comparison of auto loans from top banks in the UAE
Before applying for any loan, it is always best to take a look at what is being offered by most banks. This should get you started.
|Bank||Loan Amounts||Loans for Expats||Interest Rates||Loan Tenure||Special Features|
|Emirates NBD||Up to AED 3,500,000||Yes||2.49% to 5.62% p.a. (depending on the type of loan)||12 months to 60 months||
|NBAD||AED 500,000 to AED 1.5 million (up to 80% finance)||Yes||5.17% to 7.45% p.a. (depending on the type of loan)||Up to 60 months||
|ADCB||Up to AED 500,000 (80% of the cost)||Yes||2.49% to 11% (depending on the amount borrowed)||Up to 60 months||
||Yes||Profit rates starting at 2.35% per annum||Up to 60 months||
|Standard Chartered||Up to AED 1 million||Yes||Not Specified||Up to 60 months||
|HSBC||Up to AED 918,000||Yes||Starts from 2.49% p.a.||12 months to 60 months||
Note: Offers and interest rates mentioned above are subject to change as per bank policies.
What is a Car Loan?
When the time comes to buy that dream car and you realize that the only thing standing between you and pure driving bliss is the lack of money to buy the car, it’s time to head in for a car loan. A car loan makes sure you get the opportunity to make your dreams come true in such a way that you can enjoy the car today and pay for it tomorrow. Some of them may make the repayments even easier on you by reducing the instalments for the first year just so that you don’t experience too much of a financial burden in the initial days of owning the car.
Features of Car Loans
Car loans are set up in such a way that you can manage to get the best out of your loan not only by buying the car you want, but also by choosing the interest rates you want, the amount you want as a loan, the time you want to take to pay it back, and much more. Here are some of the common features of car loans in the UAE.
- Based on the bank providing the loan, car loans can start from AED 500,000 and even go as high as AED 900,000.
- For most car loans, the repayment period can range from 12-60 months based on what you find comfortable.
- If you go in for a flat interest rate then you could end up paying as little as 2.35% per annum. This interest rate is dependent on the banks and may change from one bank to another.
- You can choose between flat interest rates or reducing balance interest rates, which tend to be a bit higher.
- You can even take a car loan to buy a used car.
- 80% to 100% of the money needed to but the car can be taken as a loan.
- The car loan can be availed by the residents and even expats working the in the UAE.
Benefits of Car Loans
Car loans don’t just act as the financial instrument that get you the car you always wanted. They also provide lots of benefits to customers some of which can include things like:
- Most current accounts come with a minimum balance clause which cannot be violated. Many banks will waive that clause if you take car loans from them.
- Many of the banks offer credit cards that are free for the first year
- These loans can be taken for all types of cars including sedans, saloon, 4X4 vehicles, etc.
- Some banks will even provide car insurance at competitive rates along with the loans
- SIP (Staggered Investment Plans) allows for easy to afford instalments which increase gradually with the tenure of the loan
Types of Car Loans available in the UAE
Since different customers can have different needs, banks in the UAE offer auto loans that are tailored to each one's needs. These car loans are:
Conventional car loan with/without salary transfer
The conventional car loan is the one where customers can apply for a car loans based on the maximum amount that the bank will offer. They can then pay back the loan over a period of up to, or more than, 60 months along with an interest rate. These loans can also be taken with or without a salary transfer to an account held with the bank.
Islamic Car Loans
Islamic car loans are those that are auto finance that follow the rules of Islamic banking. Most of these loans follow the concept of Ijarah wherein the bank purchases the vehicle on behalf of the customer. The customer can then lease the car from the bank and pay a specific amount for a fixed period of time and once the car is paid for, the bank will transfer the ownership of the car to the customers.
Interest free (0% Interest) Car Loans
These loans tend to be the same as the conventional car loan with one small difference. The interest rate charged on these loans will not be applied for a specific period of time. For example, if you were to go in for such a loan through Emirates NBD and your intention is to purchase a Mercedes GL500 then you will not have to pay the interest on the loan for the first 5 years of the loan.
Car Loans without Down-payment: 100% Car Loans
While most banks offer only financing for a part of the cost of the car, there are banks that are willing to offer up to 100% of the cost of the car. These loans can even include the cost of the insurance for the car along with the actual price of the car.
Reducing Balance Car Loans
This is a loan where the interest rate charged on the loan that has been taken is determined based on the balance of loan left to pay back once a payment has been done. This means that if the loan amount is AED 100,000 then the first instalment will have interest charged on AED 100,000 but the next one will have interest charged only on AED 100,000 minus payment already made.
Used Car Loans
While many people go in for new cars, there are some who might want to go in for a used car. Even for such purchases, banks in the UAE provide used car loans that work almost the same way as new car loans do however, there can be one point of divergence with these loans. These loans can be taken only for cars that are not older than a specific number of years determined by the bank.
Best Car Loans available in the UAE
While there are a lot of banks that offer car loans in the UAE there are some banks that are considered the preferred places to go to for a car loan.
- Emirates NBD
- National Bank of Abu Dhabi (NBAD)
- Abu Dhabi Commercial Bank (ADCB)
- First Gulf Bank (FGB)
- Dubai Islamic Bank (DIB)
The car loans offered by Emirates NBD are available to residents of the UAE as well as expats working in the country. The bank offers loans with and without salary transfers. The amounts that can actually be borrowed can go up to AED 300,000 and be paid back over a tenure of 60 months.
The car loans offered by NBAD can range from AED 500,000 all the way up to AED 1.5 million. These loans also offer 100% financing for car insurance and are available to residents and expats and even those who are self-employed.
The car loans offered by ADCB feature financing of up to 80% of the cost of the car, subject to a maximum loan amount of AED 500,000. These loans also feature options to finance car insurance along with things like quick processing and simple documentation.
The First Gulf Bank also offers car loans to its customers that can be paid back in tenures extending up to 5 years. The bank also requires minimal documentation and, if all goes well, can do instant approval for the loans.
The car loan offered by DIB can go all the way up to AED 1.5 million. The loan does not require that salary transfers to the bank be done, and also offers options to finance insurance for the cars. It is also available to corporates, in which case the loan amount can be as high as AED 5 million.
Top Car Loans in UAE
The following banks in UAE offer auto loans as a priority product-
- Abu Dhabi Commercial Bank
- Abu Dhabi Islamic Bank
- Commercial Bank of Dubai
- Dubai Islamic Bank
- Emirates Islamic Bank
- Emirates NBD
- HSBC Middle East Ltd.
- Mashreq Bank
BankBazaar offers potential car owners the chance to identify, compare and choose the best car loan for their dream cars. Other distinct advantages include:
- The ability to compare quotes from different banks allowing you to make smarter decision about your car loan.
- The ability to compare the features provided by each loan giving you a clear picture of what you get with the loan.
- The ability to calculate instalments easily which means you don’t have to sit with a pen and a paper to figure things out.
Frequently Asked Questions - FAQs
- What is the tenure of the car loan?
- How is EMI calculated on my car loan?
- What are the documents required to submit once the bank has sanctioned the loan?
- What is the amount of money I can borrow for a car loan?
- Can I put my car up for sale before the loan is repaid?
Auto loans usually have a tenure of three to seven years. It depends upon the kind of vehicle you wish to buy. For super premium vehicles, the tenure is usually limited to three years. Moreover, the tenure is inversely proportional to the EMI, so if you have a high tenure, your EMI will be slightly low. However, the outflow of total interest will be higher.
EMI is an abbreviation for Equated Monthly Instalment wish includes the interest and principal components. The EMI for your car loan will be calculated based on the tenure chosen to repay the loan. Long-term loans come with slightly higher EMIs and loans that can be paid within a short period of time charge lower rates. Contact your bank to get a better understanding of the same.
After taking out the car loan, the bank will require the photocopies of certain documents. These include the original car papers, tax papers, insurance policy and registration certificate.
The amount of money you can borrow against your car loan will depend upon how much the vehicle costs, the kind of vehicle you wish to purchase (premium or standard), and the percentage of the amount the bank is willing to offer.
Yes, you can put your car up for sale but you cannot actually sell the car until the loan amount has repaid. Before the car is sold, you will require an NOC from the financier to legally transfer the car in someone else’s name.
Relevant Blog Posts on Car Loan
Car Ijarah or Car Loan?
When you think of a car loan you think about all the running around from one bank to another, the approval process, the paperwork and the amount that the bank will be willing to lend. Now imagine a situation where the bank buys the car and then allow you to ‘rent’ the car for them. You don’t have pay down payments or an interest on the car. Read More…
News about Car Loans in the UAE
Business credit tightens up in UAE
The Central Bank of UAE has continued to tighten the credit conditions for corporate and small businesses. The credit tightening suggests a higher degree of risk aversion in extending loans especially to SMEs. The demand for growth of business credit has softened in the June quarter. The personal loan demand slowed down and so did the demand for Car Loan and Non-Housing Investment categories. Though there has been a moderate increase in demand, the aggregate result still suggests growth. The credit demand softening was evident in SME and GRE segments with an exception of manufacturing, retail, transport, wholesale, storage, and communications.
19th July 2016
No time like the present to buy a car in the UAE
It seems like all the offers on cars and automobile finance have converged and are teaming up for the sole purpose of putting you in a car, if you live in Dubai or anywhere in the UAE.
Automobile financing is still charging around 4% interest (but if you’re lucky, you may even get a car on 0% financing). There are offers on deferred payment terms that start as late as three months after you get in your car, and even extended insurance and warranties for up to 5 years.
It seems that the general trend of buyers asking for more and more offers to be clubbed with existing discounts has started to pay off, as managers in car showrooms across Dubai seem to be tripping over themselves trying to club as many offers together as possible, and give the buyer as much value for money as possible without incurring a loss.
The average discounts currently running are between Dh 3,000 – Dh 5,000 for average cars targeted at the mid-income segment, but a person with a slightly larger bank balance could drive home in a luxury / sports car, as discounts on these are averaging around Dh 8,000 – Dh 12,000. Prices sound too good to be true? Head to your nearest automobile retailer and see for yourself. Car shopping season is on in full swing.
It’s not just retailers that are slashing prices to get sales going, manufacturers themselves are helping out by giving sellers increased flexibility in terms of pricing.
Automobile dealers all across Dubai seem to be in a war to offer the best deals – if one dealer offers 1-year free warranty, the next dealer down the road probably has a 5-year free warranty and a higher discount too. It’s like a marketplace with merchants shouting over each other with better and better offers.
If you’re looking to buy a new car or trade-in and upgrade your existing ride, the time is now.
17th November 2015
With loans now easy, automotive sales are on the rise in the UAE
With loans now easier and cheaper the automotive sales in the UAE are set for a 5% rise despite the industry slowdown. The local automotive industry has seen a slump in sales for the past 8 months, with the credit facilities and lower prices and offers are hoping to see a growth of at least 5%.
Executives of the Abdulla Al Masood & Sons Group, mentioned that they plan to announce 8%- 10% on even their 2015 models with many attractive offers.
28th September 2015