Sharjah Islamic Bank

A personal loan can be used for a variety of reasons. As the name suggests, it is a loan provided for personal necessity or agenda, which can be anything from your marriage, to travel expenditures, buying new furniture, or other home improvements, to name a few.

If you are planning a family trip to a foreign land and you are falling short of some money, you can avail a personal loan. If you are adding a new feature to your vehicle, which will cost you some additional bucks, you can get a personal loan. Similarly, for home improvements, or for catering to a sudden health condition at home, you would want to get a personal loan.

The usages of a personal loan can be manifolds. What is your specific need?

Choosing a personal loan was not easy as there is a plethora of providers who are offering even more varieties of personal loans, which differ in their features, such as interest rates, limit or cap on loan amount, tenure of payback, etc. However, this is a thing of the past now.

With ChooseYourBank.com, you can compare a wide range of Personal Loans that are available in the UAE and choose the best one that suits your requirements. You can compare them side by side based on various features. It is now as easy as a child’s play.

However, if you want more help in choosing the right Personal Loan for you, please get in touch with us and our team of experts will help you to choose the best plan. Our experts are trained and have decades of industry experience and will be able to guide you through the process of selecting the best Personal Loan provider as well.

In the UAE, you can get a Personal Loan from any of the financial institutions or banks that are offering them. Multiple such providers provide Personal Loans with various features and benefits. The basic requirements are income and residence.

If you have a regular income and a resident visa of the UAE, you are eligible for applying for a Personal Loan. However, when you apply for a loan, different providers will ask for a few other details which you need to either provide them or fill in the application form. It will again depend on the specific bank or financial institution that you are applying for the Personal Loan.

To avail of a Personal Loan, you must be having a regular income and a resident visa of the UAE. Hence, you need to provide proof of income and a copy of your residence proof as well. These are the essential documents that are necessary for applying for a Personal Loan.

However, different banks or financial institutions can ask for other kinds of documents, too, and those must be submitted as well, such as passports, Emirates IDs, Salary Certificates, Bank Statements, Family Book for UAE Nationals, etc.

For more specific information, please get in touch with our experts, and they should be able to help you with it.

An Equated Monthly Installment, also known as EMI in short, is often defined as "a fixed amount paid by a borrower to a lender at the same time each calendar month. EMI is a combination of the interest and principal ensuring that over a specified number of years, the loan is paid off in full."

In easy words, the amount that you pay to the bank or the financial institution every month until the entire loan is paid off is called EMI for the loan that you have taken. An EMI is made up of the interest amount that you need to pay and the principal loan amount that you have taken. Typically, EMI is a fixed amount, which helps the borrower to plan their expenses every month.

EMIs are to be paid for any kind of loan, not only personal loans.

When you take a Personal Loan for a fixed tenure and wait for the entire period to pay off the loan, you will often be paying more than what you have borrowed as a loan, as the interest amount will also be added to the principal. The faster you pay back the loan, the lesser you will be needed to pay.

Here is an example of the payback amount. If you take a loan of AED 20,000 at 5% for four years, you will be paying AED 475 as EMI, and at the end of the 48 months, the total amount that you would pay back would be AED 22,800 approximately. So, at the end of the tenure (4 Years, in this case) you will be paying back the principal amount of AED 20,000 and an interest amount of AED 2,800.

For more in-depth analysis, I would recommend you to get in touch with our experts at ChooseYourBank.com. They will be able to provide you with a detailed calculation based on the exact Personal Loan plan and provider that you go for.

A credit report typically tells about your credit history. If you have taken a loan in the past, the credit report shows whether you have repaid the loan in time or not, or if you have closed the loan yet, and some other information related to your loan or credit transactions.

A credit report tells about the borrower. With the history of loans that one has taken, it is essential to have a credit report that shows that the borrower is good at handling his finances and has been able to repay loans borrowed earlier.

A person with a good credit score has a better chance of getting his loan application approved.

A credit report is provided by the credit bureau of the UAE, which is called AECB or AL Etihad Credit Bureau. AECB is an authorized agency that collects and maintains credit information of individuals. They collect individual data from financial institutions and banks and, whenever requested, provide the individual credit reports of the borrowers, lenders, or customers.

Credit reports provided by AECB are approved and accepted by all the leading financial institutions in the UAE, and hence, their reports are regarded as authentic.

When you apply for a Personal Loan, there are some charges for documentation which you need to pay to the specific financial institution or the bank. This charge is called documentation or processing fee and vary from one bank to the other.

The processing fee is standard across all Personal Loan providers; however, at times during events and festivals, some of these financial institutions and banks offer complete waiver of processing fees. If you apply or avail a Personal Loan during that period, chances are that you will not have to pay those charges.

Credit Insurance or Credit Life Insurance (CLI) is a type of insurance that protects both the lender (Personal Loan provider) and the borrower (you, or someone who is availing the loan) in case you are not able to pay back the loan taken, due to death.

It is an additional feature that is often added to your Personal Loan on request. If you want this feature to be included you must pay a one-time lump sum as insurance premium and get this benefit added to your Personal Loan policy.

Please note that not all financial institutions or banks have this facility. Hence, I would recommend you to connect to our experts at ChooseYourBank.com and discuss this added benefit with your short-listed personal loans.

Suppose you have taken a loan for the tenure of 4 years. However, you are in a position after the completion of the 3rd year to pay it off and close that loan. This process is called an early settlement, where you are settling the loan earlier than expected.

Note that when you pay off the outstanding and close the loan earlier than initially expected, the amount of interest you end up paying to the financial institution or the bank is always lower. Hence, the loan provider would charge a nominal fee, called early settlement fee (or early repayment fee) to make up for that virtual loss that they would incur.

Please ensure that you know about this early settlement fee when you apply for a personal loan. Our experts at ChooseYourBank.com can help you regarding this.

Also, please note that the Central Bank of UAE has put an upper limit or cap on the early settlement fee at 1.05% (including VAT) of the outstanding loan amount. No bank or financial institution can charge you more than this.

The interest rate for Personal Loan is calculated either in reducing rate or in flat rate of interest.

An interest rate calculated on the full original loan amount is called a flat rate. It is calculated on the whole amount borrowed and does not consider the amount that is paid periodically.

As opposed to that, an interest rate calculated every month on the outstanding loan balance is called reducing rate of interest. Every month the outstanding amount reduces because of the last month’s payment and the interest is calculated based on that outstanding amount.

A borrower’s ability to pay EMI of the personal loan taken and also manage his monthly expenses is called debt burden ratio or DBR, in short. An individual’s DBR is calculated by dividing total recurring monthly debt of the borrower by his gross monthly income. It is expressed in percentage and is capped at 50% by the Central Bank of the UAE.