Minimum Credit Score required to get a car loan in UAE

Whether you are looking for options to finance a new automobile or a used one, it’s essential to know factors like your AECB credit score that affect your car loan application as well as the approved amount. 

While the required credit score for car loan in UAE varies as per the bank, we’ll walk you through the minimum credit score to get a car loan. We will also cover everything that you need to know before starting out with the applications. 

How Do Banks Check Credit Score for Car Loan?

The credit report provided by the AECB contains all your financial details including prior and ongoing loans, number of credit cards, monthly income, credit score, and so on.  Banks usually get these reports when you apply for a credit product (loan or credit card) of the bank. 

Documents Required for Car Loan in UAE

In the UAE, different banks have different requirements for providing a vehicle loan in the UAE. The most common documents to be presented to apply for a car loan in the UAE are as follows: 

• Emirates ID card
• Certificate of employment/proof of income
• Passport/visa
• Bank statements for the previous 3- 6 months
• Vehicle appraisal certificate
• Certificates of insurance
• Registration of the automobile

Note for Ex-pats:

When applying for a car loan in the UAE, ex-pats should ensure that their home country's driving license is valid in the UAE. In case their driving license is expired or invalid in the UAE, ex-pats must apply for a UAE driving license to qualify for auto finance.

How to Improve Credit Score in UAE

Eligibility Criteria for Car Loan in UAE

Given below are the major eligibility criteria for most banks and car loan providers in the UAE.

Age:

To apply for a loan in the UAE, a borrower must be at least 21 years old. A similar restriction is on the upper side, with the maximum specified age being 60-65 years. The upper limit is negotiable as per the financial conditions of the applicant and should be verified with the bank first.

Salary:

The minimum salary requirement for car loans in the UAE varies among banks. However, most banks require a minimum salary of AED 5,000 on the applicant’s part. 

Minimum Car Loan Amount:

In the UAE, banks can finance up to 80% of your vehicle's worth — you must make at least a 20% down payment in advance. In certain circumstances, the bank may accept the down payment, while others would require the down payment to be transferred directly to the automobile owner. This is another key factor that must be considered while buying a car loan in the UAE to avoid an unexpected financial burden.

Credit Score:

In the UAE, a credit score of 550 or above is required for car loans as well as other loans and credit cards. 

However, this is the minimum limit — banks may require different scores as per the particular loan, your profile, and other factors. In most cases, banks require a good credit score that shows you can skillfully manage credits and loans. 

Note: Even if you don’t have a UAE credit score, you can apply for a car loan product. The minimum score given above is primarily for those who have a credit score.

Even without a credit score, you can apply for a car loan. In this case, you must have a record of timely payment of utility bills and others. 

How is Credit Score Calculated in the UAE?

As specified earlier, credit score, calculated by the AECB, is utilised by banks when deciding on an application regarding their services like car loans. This AECB credit score is based on a range of factors like  

• Number of loans taken
• Timely (or untimely) repayment of loans
• Number of credit cards utilised 
• Accepted or rejected credit card/loan applications
• Monthly income and the ratio of monthly loan instalments and credit card dues to it Read More 

It should be noted that credit ratings are progressive, meaning that they can alter over time with a change in financial behavior and actions. Generally, late or missed payments, excessive usage of your credit card limit, multiple loans at a time, and others can all damage your credit score. Consequently, if you have a low AECB credit score, lenders and financial institutions are unlikely to issue you a loan. 

You can easily improve your credit score for car loan in the UAE by being punctual regarding the repayment of credit dues and loan instalments. 

Factors to Consider Before Applying for a Car Loan in the UAE

By following the points mentioned below, you can ensure that you get the best car loan in the UAE for your requirements.

• Interest Rates Comparison: Comparing the vehicle loan rates in the UAE allows users to obtain excellent car loan deals. With a thorough comparison, users can easily save money and have adequate funds for acquiring your car.

• Loan tenure: When it comes to monthly payments, the loan payback duration is critical. If one opts for a longer duration to pay back, the interest rate on the loan may be higher. On the other hand, shorter durations may bring higher premiums that may prove straining on your overall finances. Thus, you should verify your monthly earnings and financial situation before finalising any purchase.
• Equal Monthly Payments: The options for easy monthly payments provided by a bank for a car loan should be thoroughly explored to avoid missing payments. Besides ensuring that your monthly instalment is below a certain ratio of your income, you should also check if you would be able to manage the instalments without missing a single one. Failing with monthly instalments can significantly reduce your credit score.

• Applicable fees: Besides the monthly instalments, you will be required to pay several other one-time or recurring fees to the bank. For instance, banks charge a one-time fee for loan processing or early settlement (completing loan repayment before the specified period), or late payment penalties that may be levied on each missed payment. As these fees may add up to a significant amount, you should also examine them while applying for a car loan. 
• Insurance: Insurance is key for protecting you and your family from the risk of defaulting on the loan due to job loss or death. Loan insurance ensures that the pending due is waived or settled by the insurance company in case the borrower faces a loss of employment or demise.

Advantages of Car Loan in the UAE

Apart from having ready funds to purchase your ideal automobile, applying for an auto loan provides the following perks.

• Car loans in Dubai and the UAE are quite affordable, with several providers offering loans at 2% interest rates
• No collateral needed for a car loan as the vehicle itself serves as collateral
• Repaying the car loan on time is an easy way to build your credit history, which will assist you in obtaining further loans quickly
• Flexibility in available tenures (generally up to 60 months of tenure) allows users to efficiently manage their finances and plan as per the loan duration

Things to Consider Before Applying for a Car Loan in the UAE

A car loan is an excellent option if you want to get a car in the UAE without burdening yourself with the high vehicle costs. With several options available, you can easily find a car loan in UAE that will fulfil your requirements at affordable costs. If you are above the age of 21, fulfil the bank’s specified criteria such as minimum monthly salary, and have a good credit score for car loan, you will be able to apply for a car loan in the UAE.

Whether you apply for a car loan in the UAE online or offline, the key aspect to remember is to fill up the application correctly and have all the required documents ready for a smooth experience. Another aspect to take care of before applying for a car loan is the credit score. If you fail to have an adequate credit score for car loan, your loan application might be rejected or you may be provided higher interest rates. 

Having a good AECB credit score is easy if the efforts are made consistently. You can strive to complete all repayments on time and avail of credit cards or loans within your financial capabilities to improve your credit score. Similarly, you should avoid applying for multiple credit cards and loans or repeatedly enquiring about your credit score. Following the above steps is enough to have credit score for car loan that brings you your desired loan option. 

Before leaving, you can check more facts regarding car loans in the UAE below.

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Credit Score for Personal Loan	Credit Score for House Loan	Credit Score for Car Loan	Credit Score for Student Loan

 

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