UAE banks gave out personal loans of Dhs16.4 billion from December 2013 to June 2014 alone, according Gulf Base. This surge in personal loans in the UAE indicates the growing popularity of this form of financing. Personal loans are a great way to get easy and quick credit to meet unforeseen financial liabilities. This form of funding can be used to meet both business and personal financial needs.
Tips for Making the Right Choice
Personal loans could either be backed by collateral or be unsecured. A finance company in the UAE will check your bank statements or company accounts, as the case maybe, to grant you the loan amount. But before you make a final decision, consider the following:
- Choose a Reputable Bank – It is easy to go with the first bank you stumble upon, but go with a reputed and well established bank to have a smooth, professional experience.
- Be Sensible about the Amount – Ask yourself if you really need the loan and if yes then set an appropriate limit that you can repay easily. Defaulting on repayments can have grave consequences.
- Use a Loan Calculator – A loan calculator will help you figure out the ease with which you will be able to repay the loan once all your financial liabilities are taken care of. You can look for the loan calculator on the website of the finance company in the UAE from which you are procuring a loan. You can calculate the appropriate EMI and interest as well with the help of a loan calculator.
- Review the Terms – Study the full terms and conditions even before you commit to the loan. Although the terms and conditions are quite clearly stated in loan documents, it is good to clarify any doubts before signing on the dotted line. Also check for any extra or hidden charges applicable under the loan agreement.
- Don’t Be Lured by Lower Interest Rates on Higher Amounts – The amount you choose should be exactly as much as you need. With the interest lower and capital amount higher, you will actually end up paying as much, if not more, as monthly repayment. Ask yourself the simple question of whether you can afford it.
- Negotiate – Negotiate with the bank for a lower interest rate.
- Insurance – When you take a loan, your bank may automatically sign you up for insurance. Check the terms of the insurance. Also, insurance might not be needed if the loan amount is small.
- Keep Up with Repayments – BE consistent with repayments to avoid becoming a defaulter or losing your asset in the event of asset based lending.
Do not apply for too many loans at one time, since any finance company in the UAE will check your credit history before offering you the money. A history of too many loans that are not repaid can be a big turn-off.