Used car loan in UAE and Dubai - Get pre-approval on auto financing in minutes!

Banks in the UAE give you the option to apply for early settlement on your auto loan in case you want to pay the loan off early. An advantage of doing this is saving on interest charges for the remainder of the car lease. In an early car loan settlement, banks charge an early settlement fee which is usually 1% of the outstanding loan amount.

You can choose from 2 types of Interest Rate when financing your used car in the UAE, Flat Rate orReducing Rate

A flat rate means that the Interest Rate is calculated on the original amount of the car loan; it is fixed and the interest to be paid will not reduce over the tenure.

A reducing rate means that the Interest Rate is calculated on the outstanding car loan amount on a monthly basis. Therefore, as your outstanding auto loan amount decreases each month so will your interest payments.

Think carefully about which interest rate you choose when buying a car under finance in UAE as lower flat rates can be misleading. It can be more expensive than a reducing rate over your auto financing tenure. To get the best deals, see CarSwitch’s Bank Financing Comparison Table for the flat and reducing rates.

Processing / arrangement fee (also known as application fee) is the amount banks in the UAE charge as an administrative fee to take an auto loan for your used car. Banks either ask you to pay this upfront or add it to your car loan amount. This fee is usually 1% of your principal car loan amount, and may have minimum (or maximum) amounts of AED ~500 (or AED ~2,500)

We’ve generally seen the end to end process take 1-2 weeks for an auto lease, though the largest contributor is the time buyers take to get all the correct documents. So it helps quite a bit to get that started quickly.

Document requirements may vary from bank to bank, but most banks in the UAE require:

• Proof of income - Salary Certificate / Salary Transfer Letter if salary is not assigned to the bank where you will be taking your car loan
• 3 Months of bank statements showing regular salary deposit
• Valid Passport and Visa copy
• Valid Emirates ID
• Valid UAE Driving Licence
• Valid Valuation Certificate
• Free Zone Card (If applicable)

Of course before you get this far on your auto financing application, don’t forget to thoroughly review these 7 things before buying any used car

Eligibility criteria vary from bank to bank in the UAE, though generally banks require

• You are a UAE National or Resident aged between 21 and 65 years.
• A minimum monthly salary of AED 5,000
• 20% of the car value paid as an up-front down payment (central bank requirement)
• The total car loan amount is at least AED 20,000 or so
• You have a healthy credit history and are likely able to repay the auto loan

There are several costs to be aware of when financing a car in UAE. Some of the main costs for your car financing include:

• Bank Processing Fee: A one-time administration fee banks charge at the beginning of your auto financing
• Downpayment: An upfront payment usually made to the bank. Banks in UAE usually finance upto 80% of the car’s value, therefore, 20% must be paid upfront.
• Interest Payable:The amount of interest you owe to the bank for your auto loan, based on the amount financed for your used car, the loan duration and whether you opt for a flat or reduced rate.
• EMI: The equal monthly installments, including interest payable and loan principal amount, over the tenure of your loan. Use CarSwitch’s EMI calculator in the car detail screen of any car to calculate the specifics for that car
• Car Valuation Certificate: Banks require an independent expert to validate the value of the car you are looking to finance. CarSwitch is a trusted valuation partner of several banks and can travel to the cars location to inspect and value it for you hassle free
• Penalties: Be aware that banks charge a fee for late payments towards your auto financing. However, some banks allow you to defer the first few payments for free. Contact CarSwitch for the latest / best deals available now.

Before purchasing your used car, it is important to keep these additional costs in mind. Review these here.

Yes, this is an option with some banks, although a small processing fee may apply

No, most banks in the UAE allow you to take an auto loan without having to transfer your salary to that bank. Though you may get a lower interest rate if your salary is transferred to the bank as they have more confidence in your ability to repay the car loan.

There are various factors that determine which interest rate you pay for your auto loan. Here are some of the main ones:

• New vs Used Car - Interest rates are lower for a new car in UAE
• Car Type - Passenger cars tend to have lower interest rates than light commercial vehicles
• Car Age - The newer the car, the lower the Interest Rate due to lower maintenance costs.
• Salaried vs Self Employed - Auto financing interest rates differ depending on the amount of salary or health of your company. Individuals with a higher salary / good credit scores and credit history will receive lower interest rates.
• Bank where salary is deposited - You will obtain a better interest rate if your salary is deposited in the same bank that you take your auto loan as you are seen as a less risky customer.
• Your car financing tenure - The shorter the tenure of your car loan, the lower your interest rate
• Your Down Payment - The higher the amount you pay upfront, the lower your interest rate.

Read our full tips to save money on car financing before buying a used car in the UAE