Can't Afford a New Car? What are your options?
You want a car but can’t afford to go and buy one. That is a dilemma which is very real for a lot of people. However, there is hope and it comes in the form of a used car. There are lots of people, all over the UAE, who are looking to sell their cars and get new ones just as there a lots of people looking to buy used cars because they can’t or don’t want to spend on a new one.
Whatever the reason may be, the fact remains that you want a used car and you are going to need help getting it. So, where do you go looking for the used car loan in UAE? The answer is the banks. Yes, most of the times car loans from are thought to be for new cars only but that is not true. Many of the banks will fund used cars too.
Conventional Car Loan for Used Cars
The conventional car loan in the UAE works in the same way that it does all over the world so the real question is, “how does the used car loan differ from the new car loan?” Let’s take a look at the various components of the loan to figure that out.
Eligibility Criteria for Used Car Loans
The eligibility criteria for most banks, when it comes to a car loan, is that you must be above the age of 21 years and that you should have a predetermined minimum monthly income. This monthly income may differ from one bank to another and can, in some cases, be about AED 5,000. In the context of the used car loan, these conditions don’t change.
Down Payments for Used Car Loans
With most banks, finance is available for up to 80% of the cost of the vehicle and you, as the customer are expected to pay the remaining 20% of the cost as a down payment towards the car. There are also banks that provide 100% finance for cars and both these schemes are applicable to used cars.
Interest Rates for Used Car Loans
The interest rates are the one thing that may differ for used and new car loans. For example, HSBC charges an interest rate of 2.49% per annum for new car loans but for used cars the interest rate is about 3.75% per annum.
Loan Amounts for Used Car Loans
Some banks offer up to AED 500,000 for car loans, others AED 750,000 which some even go as high as AED 900,000 and beyond. This is another area where there is no difference between the new and used car loans.
Documents Required For Used Car Loans
The documents required for most new car loans are copies of salary certificates, passports, application forms, etc. However, in the case of used cars, the banks may require that you provide a quotation for the proposed price of the car, to the bank while applying for the loan.
Durations for Used Car Loans
New car loans can be taken for durations ranging from 1 year to 5 years and the same duration applies to used-car loans just as it does to new car loans.
Car Ijarah for Used Cars
The concept of car Ijarah is that if you are not in a position to, or don’t want to pay the down payment, you can approach a bank that will purchase the car for you and then lease or rent it out to you for a fixed monthly payment for a fixed period of time. Once the payments are over, you have the option to have the car transferred to you. This loan is also available for used cars and can go up to AED 750,000, depending on the bank.
Key Things to Remember Before Purchasing a Used Car
Of lately a lot of people in UAE have been opting to buy used cars over new cars as it is much cheaper. But purchasing a used car comes with its own set of challenges. It is important to know everything about buying a used car to know the problems that you might face with it and the solutions to those problems. Buying a used car is a tricky proposition, in that, you need to be very careful about what you buy. The first thing to consider is, obviously, the condition of the car but there are other things to consider too.
Listed below are some of the important things to remember before purchasing a used car.
- Check for Unpaid Fines
- Need For Roadworthiness Certificate
- Dealership, Trade-ins and Private Sellers
- Condition of the Car
- Servicing the Car
- Is the interior damage free?
- Could it be stolen?
- Does it have insurance?
- Used Car Loan- Just because you are buying a used car it doesn’t mean that it’s not going to burn a hole in your pocket. Chances are that you might still have to take a loan for the car especially if you are buying a high end car. Compare between various banks that offer used car loans to choose the best loan option for your car.
If you have chosen your car, then you need to make sure that the previous owner has paid off all the fines for the car. If you are unsure about it, you can check with the police about the status of any fines related to the car. If there are some, you need to get the original owner to pay them so that you can get the relevant certificates to submit when your car is registered in your name.
This is a requirement of all car and something that is not a consideration when buying a new car. With a used car, you need to make sure that the car is roadworthy. Make sure that the roadworthiness certificates for the car are up to date before you make the purchase.
One doesn’t have a dearth of option when it comes to buying a used car. One can find good deals for used cars at trade-ins, private sellers and even dealerships. It is always better to explore all the options before zeroing on one particular place to purchase the car from.
The second thing you need to check for when you are purchasing a used car is its condition. Is the bodywork damaged? Is the steering and engine working fine? Considering that it is a used car, there are chances that there might me minor damages and it is important to be informed about them prior to purchasing your car.
Enquire with the seller or dealer to know the service history of the car. A car that has been serviced from time to time will be as good as new. Lack of good service might hinder the performance of the car. Knowing about the service history of the car will give you a better idea about the state of the car.
Now that you have checked the bodywork of the car, it is important to check the interior of the car to ensure it is damage free. Check the seats, the covers, the entire interior of the car. If you do find any damage, negotiate the price with the dealer.
One of the worst things that can happen to you while you are buying a used car is that you could end up buying a car that has been stolen. So how do you make sure that the used car that you are looking into is not stolen? It is very easy. All one has to do is check with the UAE/ Dubai police to ensure that the car is not stolen. It is also important to check if the number on the registration plate of the car matches the number on the registration paper.
Check with the dealer or seller to see if the car has insurance. Chances are you might have to opt for a new insurance anyway. There are several banks in UAE that offer car insurance specially designed for used cars. Once you’ve zeroed in on the car you want to buy, the immediate step should be opting for a car insurance.
Frequently Asked Questions - FAQs
What is the maximum amount of money I can borrow to purchase a second-hand car?
What percentage of the vehicle will be financed by the bank?
Who is eligible for a used car loan in the UAE?
Can I apply for a used car loan online?
What are the documents required to avail a used car loan?
The maximum amount the can be borrowed for the purchase of used cars may vary from bank to bank, but most major banks in the UAE sanction AED 500,000 for the same. While some banks offer up to AED 750, 000, there are those that offer amounts up to AED 900,000.
Most of the banks in the UAE that offer loans to purchase second hand cars finance up to 80% of the vehicle, but rates may be different with different banks. There are some banks that cover 90% of the vehicle’s value while others cover the entire amount.
Most banks in the UAE have a minimum age requirement for those seeking a loan to purchase a used car. The applicant must be older than 21 years of age and must show the bank that he/she has a predetermined minimum monthly income. The requirements vary from provider to provider, but most banks require the customer to have remained employed for a minimum of two years and for at least one year with your present employer.
Yes, most banks offer online services so that customers can apply for and avail loans from the comfort of their homes. Taking out a used car loan online can not only help in saving time and effort, but also eliminates paperwork and all the hassles associated with it.
The applicant must submit their age proof, proof of identity, income proof, address proof and sign verification proof so that the bank can confirm your eligibility for the used car loan.
While you are here, you may have a look at these:
All the top banks in the UAE offer car loans with lots of attractive features and a wide range of benefits. But out of so many, only a few have made it to the top.
There are many financial institutions in the UAE which finance 100% of the loan amount, and you do not need to pay any down-payment while buying the car.
Even the expats in the UAE can buy the car of their dreams with a car loan. Although, expats need to provide a little more information about themselves in comparison to an Emirati, but still it is an easy business as all the leading banks in the UAE offer car loans for the expats. .
The banks in the UAE offer NRIs staying there to apply for a car loan, especially designed for them, in India for their family or for their personal use. The car loans are modified to make it easier for the NRIs to avail the loans.
The banks in the UAE provide car loans even for buying commercial vehicle(s). Even these offer a wide range of benefits like high range of financing, flexibility of down-payments and longer tenures.
Car Ijarah is another term for Islamic Car Financing in the UAE. It differs a lot from the conventional banking mode and is based on the Sharia principles of the Islamic law.
News about Used Car Loans in the UAE
Used Car Market inaugurated in Sharjah
The Souq-Al-Haraj used car market was inaugurated last month, with the aim to boost economic activity in Sharjah by attracting more dealers.
The project came at a total cost of Dh250 million, and also featured the launch of the first-of-its-kind (in the Middle East) Emirates Auction which is an online car auction.
On-site technical tests and Tasheel services are provided in the new market, which has over 400 showrooms with a capacity of over 25,000 cars.
02nd February 2016