Used Car Loan in the UAE

The UAE is known for its luxury lifestyle and modern infrastructure, making it an excellent place to buy cars. Sadly, not everyone can afford a new car. A used car loan is a great solution for those who want to buy a car without spending too much money. This guide provides all the information you need about used car loans in the UAE, including how to apply, what documents you need, and the benefits.

What is a Used Car Loan in the UAE?

While car prices in the UAE are relatively affordable, buying a car is still a big investment. Saving enough money to buy a car can be challenging for many people. To help with this, many banks and financial institutions in the UAE offer car loans. These loans make it easier to buy a car and allow you to pay back the amount in flexible instalments with a low interest rate.

If you want to buy a used car, you can apply for a second-hand car loan from a bank or a private financing company. The interest rate for a used car loan in the UAE depends on several factors and is usually slightly higher than that for new car loans.

Why Choose a Second-Hand Car Loan in the UAE?

Financing a second hand car in the UAE helps you avoid paying a large amount upfront. Instead, you can pay off your loan in flexible instalments with low interest rates, typically around 4-5%. Here are some key features and benefits of getting a second-hand car loan in the UAE:

• Competitive Interest Rates: Used car loans can be a bit more expensive than new ones, but they still have affordable interest rates between 2% and 5%, depending on your credit score and the bank. You can choose a flat or a reduced interest rate, depending on how you prefer to make your repayments.
• Flexible Loan Tenure: Banks and financial institutions in the UAE provide flexible loan tenures of up to 5 years. You can choose the tenure and instalment amount that suits you best. Remember that longer loan tenures usually come with higher total interest payments.
• Convenient Loan Processing and Approval: The online loan application process makes applying for used car financing easy. Some banks even offer same-day loan approval. Offline applications or loans from private financers may take up to 4 business days.
• Early Settlement Option: Many banks in the UAE allow for early loan settlement. This means you can pay off the remaining balance in a lump sum before the end of the loan term, though an early settlement fee may apply depending on the bank and loan amount.

• Low Salary Requirement: To qualify for a car loan, you typically need a minimum monthly salary of AED 5,000. This makes car loans accessible to a wide range of people.
• Improves Credit Score: Taking out a car loan and making regular payments can boost your credit score. A good credit score helps maintain a positive relationship with the bank and increases your chances of securing larger loans in the future.

Types of Second-hand Car Loan Interest Rates in the UAE:

When you take a loan for a second-hand car in the UAE, you must pay interest based on your loan amount and the loan term. The interest rate can differ on factors like the lender and your credit profile. Most banks offer two main types of interest rates for used car loans:

• Flat Interest Rates: With flat interest rates, the interest is calculated on the full principal loan amount for the full loan term. The interest rate remains the same throughout the loan period, so the interest paid in the first instalment is the same as in the last.
• Reducing Interest Rates: Interest rates are calculated on the outstanding loan balance. This means your interest decreases with each instalment as the principal amount reduces. Although the calculation is more complex compared to flat interest rates, lowering interest rates is generally considered more economical over the loan term.

Check out our guide on Car loan calculator to know more about it.

Banks Offering Used Car Loans in UAE:

1. Abu Dhabi Commercial Bank:

ADCB Bank is one of the top banks in the UAE, giving a range of banking services like personal and business accounts and loans. Their used car loans are particularly attractive, with interest rates at just 1.99%. Here are the key details of ADCB used car loans in the UAE:

• Loan tenure: Up to 60 months
• Maximum loan amount: Can go up to AED 1.5 million
• Loan amount: Up to 80% of your car’s value
• Minimum salary requirement: AED 5,000 or more
• Processing fee: 1%, capped at AED 2,500

Require Documents:

Salaried	Self-employed	Companies
Completed loan application form	Completed loan application form	Completed loan application form
Copy of valid passport, visa, and Emirates ID	Copy of valid passport, visa, and Emirates ID	Copy of valid passport, visa, and Emirates ID of company signatory
Copy of valid driving license	Copy of valid driving license	N/A
Salary certificate addressed to ADCB, dated within the last 30 days	Copy of valid trade license	Copy of valid trade license
Copies of the last 3 months’ bank statements	Copies of the last 3 months’ bank statements for both personal and business accounts	Copies of the last 3 months company bank statements
Quotation from the car dealer	Quotation from the car dealer	Quotation from the car dealer
N/A	Copy of valid power of attorney (if applicable)	Copy of valid power of attorney (if applicable)
Details of existing loans and liabilities	Details of existing loans and liabilities	Details of existing loans and liabilities

Eligibility Criteria:

• UAE Nationals and Residents: Both citizens and residents can apply.
• Minimum Salary: AED 5,000 per month or more.
• Employment Status: Minimum of 6 months with current employer or confirmed employment.’

Terms & Conditions:

ADCB loans are offered at the sole discretion of ADCB, based on their terms and conditions and the submission of acceptable documentation. Terms and conditions apply. To view the complete Consumer Banking terms and conditions, click here.

How to Apply:

• Visit the official website of the bank
• Login using your credentials.
• Have your documents ready and upload them with the online application form
• Apply with the required documents and necessary steps.
• After verifying your details, the bank approves your loan amount and deposits it into your account.

2. Dubai Islamic Bank:

Dubai Islamic Bank is one of the most well-known and largest Islamic banks globally. It offers many Sharia-compliant products, including comprehensive loan and credit services. Their used car loans have attractive features with low-profit rates and finance charges. Here are the details:

• Flexible loan tenure: Up to 60 months
• Maximum loan amount: AED 1.5 million
• Processing fee: 1% of the loan amount, capped at AED 2,650
• Foreclosure charges: 1% of the remaining loan amount

Required Documents:

• Personal Bank Statements: Minimum 3 months for salaried individuals and 6 months for self-employed.
• Salary Certificate/Payslips: Issued by the employer.
• Passport Copy: Including residence visa for expatriates.
• Emirates ID Copy: Valid identification card.
• Vehicle Quotation: From the dealer.
• Trade License: For self-employed individuals and businesses.
• Valid Driving License: For self-employed individuals.
• Memorandum of Association/Partnership Agreement: For companies.

Eligibility Criteria:

• Minimum Salary: AED 3,000 per month.
• Employment Status: Open to salaried individuals, self-employed professionals, and companies.
• Age Requirements: Minimum age of 18 years.
• Employment Duration: Minimum of one month with at least one salary credited to the account.

Terms and Conditions:

• Loan Amount: Up to AED 1 million for individuals and AED 8 million for companies.
• Repayment Tenure: Up to 60 months.
• Profit Rates: Flat rates ranging from 2.15% to 6.00% per annum.
• Salary Transfer: Not mandatory.
• Instalment Postponement: Available via DIB phone banking.

How to Apply:

• Visit the official website of the bank
• Login using your credentials.
• Select the type of Auto Finance loan you want.
• Have your documents ready and upload them with the online application form
• Apply with the required documents and necessary steps.
• After verifying your details, the bank approves your loan amount and deposits it into your account.

3. Emirates NBD Bank:

Emirates NBD is one of the known and biggest banks in the UAE by paid-up capital. They offer competitive interest rates for used car loans with flexible loan terms. The bank provides hassle-free, quick one-day loan approval, meaning you can receive the loan amount on the same day. Here are the details of Emirates NBD car loans in the UAE:

• Flexible loan tenure: Up to 60 months
• Maximum loan amount: Up to AED 500,000
• Salary requirement: AED 4,000 to 15,000, depending on individual circumstances
• Processing fee: 1%, capped at AED 2,500
• Finance amount: Up to 80% for private vehicles, 75% for sports cars, and 90% for company vehicles

Required Documents:

• Completed Loan Application Form
• Valid Passport and Visa Copies
• Emirates ID
• Salary Certificate (for salaried individuals)
• Bank Statements for the last 3-6 months
• Quotation from Car Dealer

Eligibility Criteria:

• Minimum Salary: AED 5,000 per month
• Age: 21-65 years
• Employment: Confirmed employment status or business stability for self-employed

Terms and Conditions:

• Loan Amount: Up to 80% of the car’s value
• Repayment Tenure: Up to 60 months
• Interest Rates: Competitive and based on reducing balance
• Early Settlement: Options available with applicable charges

How to Apply:

• Go to the Emirates NBD Auto Loans page.
• Select the type of auto loan you would want to apply for.
• Fill out the online loan application form available on the Emirates NBD website.
• Collect and prepare the necessary documents:
• Submit the completed application form and the required documents online or by visiting a nearby Emirates NBD branch.
• The bank will review your application and documents. They may contact you for any additional information or clarifications.
• Upon approval, the loan amount will be disbursed to your account or the car dealer, depending on the arrangement.

4. Abu Dhabi Islamic Bank:

Abu Dhabi Islamic Bank (ADIB) is renowned for its world-class, Sharia-compliant banking products. Among its offerings, used car loans are particularly popular. You can easily apply online and get quick approval. You can enjoy preferential profit rates and flexible loan terms depending on your credit score. Here are the features of ADIB used car loans in the UAE:

• Flexible loan tenure: Up to 60 months
• Maximum loan amount: AED 500,000
• Minimum income requirement: AED 5,000 or more
• Processing fee: 1% of the loan amount, capped at AED 2,500
• Loan amount: Up to 80% of your car’s value

Required Documents:

• Valid passport (with residence visa for expatriates)
• Emirates ID
• Driving license
• Car quotation/evaluation letter addressed to ADIB
• Salary transfer letter/salary certificate addressed to ADIB
• Three months bank statement (if salary not credited to ADIB)

Eligibility Criteria:

• Minimum salary: AED 5,000
• Minimum age: 21 years
• Maximum age at finance tenor completion: 65 years for UAE nationals, 60 years for expatriates

Terms and Conditions:

• Finance amounts up to AED 1 million for UAE nationals, AED 500,000 for ex-pats with salary transfer, and AED 350,000 without salary transfer
• Repayment terms up to 60 months
• Profit rates starting from 2.25%
• Instalment holiday up to 210 days for the first payment
• One yearly instalment deferment

How To Apply:

• Go to the ADIB Car Finance page.
• Prepare Required Documents:
• Fill out the car finance application form on the website or at an ADIB branch.
• Submit the completed form and required documents at an ADIB branch or online.
• Wait for approval. Once approved, the loan amount will be disbursed as per the terms.

5. RAKBANK:

RAKBANK is one of the oldest local banks in the UAE. Their used car loans are some of the most affordable in the country, with interest rates starting at 1.99% for salaried individuals. They offer numerous benefits, including flexible repayment terms. Here are the features of RAKBANK used car loans:

• Maximum loan tenure: Up to 60 months
• Finance to down payment ratio: 80% finance to 20% down payment for personal vehicles
• Processing fee: 1.05% of the loan amount
• Early settlement option based on the outstanding loan amount
• Minimum salary requirement: AED 5,000 or more

Required Documents:

• Completed Loan Application Form
• Valid Passport and Visa Copies
• Emirates ID
• Driving License
• Salary Transfer Letter/Salary Certificate
• Three months’ bank statements (if salary is not credited to RAKBANK)
• Car Quotation/Evaluation Letter addressed to RAKBANK

Eligibility Criteria:

• Minimum Salary: AED 5,000 per month
• Age: 21-65 years
• Employment: Confirmed employment status

Terms and Conditions:

• Interest Rates: Starting from 2.89% flat rate per annum
• Loan Amount: Up to 80% of the car’s value
• Repayment Tenure: Up to 60 months
• Processing Fee: 1% to 1.5% of the loan amount
• Deferment: Up to 2 deferrals allowed, once per year
• No Salary Transfer Required: Flexible options available

How To Apply:

• Go to the RAKBANK Auto Loans page.
• Collect the necessary documents listed above.
• Fill out the auto loan application form online or at a RAKBANK branch.
• Submit the completed form and required documents online or at a nearby RAKBANK branch.
• Wait for loan approval. Upon approval, the loan amount will be disbursed per the agreed terms.

6. First Abu Dhabi Bank (FAB):

First Abu Dhabi Bank is known as one of the safest banks globally. It provides a variety of financial services and products. Among these, FAB car loans are particularly popular with vehicle buyers. They provide competitive rates, low financial charges, and flexible loan terms. Here are the features of FAB used car loans in the UAE:

• Flexible loan tenure: Up to 60 months
• Maximum loan amount: AED 1.5 million
• Low-interest rates: 1.99% to 5.6%, depending on employment and residency
• Salary requirement: AED 8,000 per month for employed individuals and AED 25,000 for self-employed individuals
• Finance amount: Up to 80% of your vehicle’s cost

Required Documents:

• Completed Loan Application Form
• Valid Passport and Visa Copies
• Emirates ID
• Driving License
• Salary Transfer Letter/Salary Certificate
• Three months’ bank statements (if salary is not credited to FAB)
• Car Quotation/Evaluation Letter addressed to FAB

Eligibility Criteria:

• For Salaried Individuals:
  • Minimum monthly salary: AED 7,000
• For Self-employed Individuals:
  • Minimum average balance of AED 25,000 for the last three months

Terms and Conditions:

• Loan Amount:
  • Up to AED 1.5 million or 80% of the car’s value
• Interest Rates:
  • Starting from a 2.15% flat rate (equivalent reducing rate of 4.10% per year)
• Repayment Tenure:
  • Up to 60 months
• Down Payment:
  • Minimum 20% of the car’s value
• Processing Fee:
  • 1.05% of the loan amount (minimum AED 525 and maximum AED 2,625)

How To Apply:

• Go to the FAB Car Loans page.
• Gather all necessary documents as listed above.
• Fill out the car loan application form on the website or at an FAB branch.
• Submit the completed form and required documents online or at an FAB branch.
• Await approval. Once approved, the loan amount will be disbursed per the agreed terms.

Bank Name	Interest Rate	Click to apply
Abu Dhabi Commercial Bank	1.99%	Apply Now
Dubai Islamic Bank	Low-profit rates	Apply Now
Emirates NBD Bank	Competitive rates	Apply Now
Abu Dhabi Islamic Bank	Preferential profit rates	Apply Now
RAKBANK	1.99% for salaried individuals	Apply Now
First Abu Dhabi Bank	1.99% to 5.6%	Apply Now

Eligibility Criteria to Apply for a Used Car Loan in UAE:

Before you can apply for a used car loan, you must meet certain requirements set by the banks. Here are the main eligibility criteria:

• Age: You need to be at least 21 years old to apply. The maximum age to get a car loan is 65 years.
• Minimum Salary: If employed, you need a minimum income of AED 4,000 – 5,000. The income requirement may differ for self-employed individuals.
• Down Payment: The central bank’s guidelines require a down payment of 20% of the car’s market value.
• Credit Score: A good credit score is necessary. A score of 700 or above is generally good to get your loan approved.

What Are The Basic Documents Required to Apply for a Used Car Loan in UAE:

Once you meet the eligibility criteria, you must submit certain documents during the loan application process. Here is a list of the required documents for salaried individuals:

• Car Loan Application Form: Completed by the applicant.
• Passport: A valid passport ID with a copy.
• Emirates ID: A valid  Emirates ID with a copy.
• Visa Details: For expatriates residing in the UAE.
• Driving License: A driving license that is valid and issued by the UAE’s Road Transport Authority.
• Bank Statements: Bank statements from the last 3-6 months. 
• Salary Certificate: A salary certificate from your current employer (dated within the previous month). 

Note: The bank will likely ask for additional documents based on your employment and financial status. Check with your bank to confirm the required documents before applying for a used car loan.

How to Apply for a Used Car Loan in the UAE?

Thanks to digital advancements in banking, you can easily apply for used car loans and get approval within hours. Here are the ways you can apply:

• Online Application:
  • Visit the official website of the bank.
  • Have your documents ready and upload them with the online application form.
  • After verifying your details, the bank approves your loan amount and deposits it into your account.
• Offline Application:
  • Visit the nearest bank branch in person.
  • Bring the necessary documents, including personal identity and contact details.
  • You can fill out an offline loan application form and submit your documents.

Both methods are straightforward and designed to make the application process quick and convenient.

Factors Affecting the Cost of a Used Car Loan in the UAE:

Several factors affect the cost of your used car loan in the UAE:

• Current Market Value of the Car: The loan amount is based on the car’s market value. The total cost of your loan depends on this principal amount.
• Type of Car: Loan interest rates vary depending on the type of vehicle. Normal passenger cars generally have lower interest rates than premium SUVs and luxury cars.
• Age of the Car: Interest rates are also influenced by the car’s age. Newer cars typically have lower interest rates than older cars.
• Employment Status: Salaried individuals often receive lower interest rates than self-employed individuals.
• Bank Relationship: If you apply for a loan with the bank where your salary is disbursed, you might get lower interest rates because of your existing relationship with the bank.

Importance of Car Insurance:

Buying a car is an exciting achievement, but it also comes with a big financial responsibility. One important thing you shouldn’t forget is car insurance. Motor insurance for your used car is important because it protects you financially from damages or losses caused by accidents, theft, natural disasters, and other unexpected events. It covers repair costs and liability protection if you cause injuries or damage to others. Moreover, car insurance is often legally required in the UAE, ensuring you follow the traffic laws. By getting the right car insurance, you protect your investment and have peace of mind, knowing you are covered against unexpected expenses and liabilities.

Final Takeaway:

A used car loan is an easy and cost-effective way to own a car in the UAE. By learning about the process, requirements, and benefits, you can make a smart choice and get the car you want. Always compare different loan options to find the best fit for your finances.

For more details and to apply for a used car loan, visit the websites of top UAE banks like Emirates NBD, Dubai Islamic Bank, and Abu Dhabi Commercial Bank.

To learn more about car loans in the UAE, check out our guide to get in-depth information.

Frequently Asked Questions (FAQs):

Q. Can I Get a Car Loan for a Second-Hand Car in UAE?

Yes, you can get a car loan for a second-hand car in the UAE. By taking a car loan, you can easily buy and pay a vehicle back in flexible installments with a low interest rate. You can apply for a second-hand car loan from any bank or private financing institution to buy a used car.

Q. What is the Eligibility for a Car Loan in the UAE?

To apply for a used car loan in the UAE, you need to meet the following criteria:

• Be a UAE national or a UAE resident.
• Be between 21 and 60 years old.

Q. How Much Interest Do I Need to Pay for a Used Car Loan in the UAE?

The interest rates for used car loans in the UAE are usually slightly higher than those for new car loans. Generally, you can expect to pay an interest rate of around 4-5% of the principal loan amount.