How to Apply for a Loan as an Expat in the UAE: Tips and Requirements

Loan

The lending system has changed a lot since it was introduced by the ancient Greeks and Romans 3,000 years ago. In fact, entire institutions have been built around it to provide financial assistance to those who need it.

In particular, personal loans in the UAE offered for expats mean a great deal for people struggling with their finances. Being a foreign resident in a country no longer limits your opportunity to achieve greater things, even with limited cash in your savings – at least, not in the UAE.

Ready to apply for a loan? Here, you will learn the basic requirements and criteria to qualify for expat loans and some advice on choosing the right lender for your unique circumstances.

Personal Loan Application: The Criteria

Before you start looking around for loan offers, you must first determine if you are qualified for one. This can be done by identifying the criteria set by financial institutions offering personal and salary loans in the UAE.

Although this may vary depending on the bank, four factors are more likely to remain the same across the board:

1. Age Limit

Before everything else, lenders and financial institutions will look at your age first.

UAE citizens can apply for loans below the age of 21. But as an expat, you need to meet this minimum age requirement to qualify for a personal loan. In some cases, lenders also implement a maximum age during loan application, which is often set at 60 years of age.

2. Status of Employment

When applying for a loan, you need to provide proof of your employment or source of income.

Those who are earning through self-employment (e.g., businessmen and professionals) and employment by a company (e.g., those who get a regular paycheck) can apply for personal loans, so long as they can provide documentation of their source of income or status of employment.

In many cases, expat applicants need to be employed by companies listed in a bank’s approval list. However, some institutions approve loan applications even without this, so long as the expat can comply with other requirements and meets certain conditions.

3. Minimum Salary

Most lenders require a minimum salary for applicants who wish to get a personal loan.

There is no universal amount set for this as every bank and other financial institution will have different standards on the ideal monthly income a loan applicant should have. But in most cases, an applicant needs to have a minimum monthly income of AED 7,000.

Aside from a base income, you may also need to have a salary transfer account within the same institution to qualify for a loan. While this doesn’t apply to all, it is worth noting as a couple of banks have this requirement.

4. Documents

Finally, loan applicants must also submit all the documents required by the bank. Although the final list may vary depending on the institution, all will require you to fill up an application form.

Once this is done, you may also be asked to provide the following:

  • Proof of identity – this can be your visa or passport
  • Proof of income – this can be your payslip, employment contract, or tax documents if you are self-employed

3 Tips When Choosing a Loan for Expats

With so many options available, it may be a bit challenging to choose the right loan and lender for you. Below are three expert tips that can help you decide:

1. Consider the interest.

In exchange for allowing you to borrow money, lenders will charge a certain percentage of the principal loan amount. This is called the interest rate.

There are two kinds of interest rates attached to personal loans offered to expats in the UAE, namely:

  • Flat Interest Rate – This refers to the percentage of the principal loan amount charged consistently throughout the loan tenure. It remains constant and can range between below 3 percent and above 7 percent.
  • Reducing Interest Rate – This type of interest rate decreases every time a payment is made for the loan. It can range between 5 percent to 14 percent.

2. Think about the ease of repayment.

Sure, loans grant you more leeway in your expenses, but that doesn’t mean you have to take them lightly. On the contrary, you need to be serious about your loan obligations and calculate how well you can manage your budget whilst making repayments in the next few years. Otherwise, you might risk loan default that will negatively affect your credit score.

Fortunately, if you get a loan from your bank, you can have your loan payments deducted from your incoming salary. You’ll no longer have to make payments yourself since your loan will be connected to a strict auto-debit facility. This will also ensure that you make your loan repayments on time.

3. Do the math.

Before taking out any type of loan, you must do the math first. This will ensure that you have the capacity to repay the loan amount in full without sacrificing your daily budget.

Among the numbers you should include in your calculations are:

  • Monthly income
  • The total of any existing debt
  • Interest rates
  • Loan tenure
  • Benefits
  • Service fees

Offload Your Worries

Anyone can experience some sort of financial burden or stress.

So, if you’re faced with a situation that may force you to take out a loan, don’t worry – many banks in the UAE can help, even for expats like you.

Check if you qualify for one and use this article as a guide when applying for a personal loan.

AUTHOR BIO

Venkat Mahadevan is currently the head of the Wealth Management and Branch Banking business for Citi’s Consumer Bank in the Middle East. He has 30 years of experience in banking and in Citi, having spent most of his career in various roles in consumer banking and especially in Wealth Management. He also has extensive experience in the various aspects of Off-shore Wealth Management. He has worked with Citi in India, USA and Singapore prior to moving to the UAE.