Private Lenders in UAE

Finding the most suitable loan that aligns with your budget can be a daunting task in some cases, given the eligibility criteria and minimum AECB credit score requirement. Financial institutions may reject a loan application if they fail to meet the minimum standards. 

In such cases, many UAE residents try to access funding elsewhere, say private lenders. While financial institutions are established and traditional sources of finance, private lenders, including non-banking operations or online lenders, have also established themselves in the loan market in UAE.

However, it is essential to note that besides the exception of a few registered private money lenders in UAE, private money lending is illegal and has various risks associated. Thus, it is vital to consider the pros and cons of private lenders in the UAE to make a sound decision. 

How Do Private Money Lenders in the UAE Work?

Private lenders allow you to obtain a loan without meeting any minimum requirements. They are not linked to any financial institution or credit union. Due to the informal application process, private lenders in the UAE fast-track the approval process and are willing to give loans even to people with bad credit scores or low income.

The process of private money lending is similar to the other loan process. You can obtain funding to consolidate debt, buy property, manage wedding expenses, make home improvements, and much more. 

You will have to apply just like any other loan, although the requirements may differ. For instance, some lenders may ask you to submit collateral. The requirements, similar to banks, vary from one lender to the other. 

Personal Loan from Private Finance in UAE

Are Private Lenders in UAE Legal?

In the UAE, lending money to an individual or an organisation and charging interest on that is illegal. In accordance with the regulations, only licensed financial institutions and banks are allowed to lend money on interest to individuals and organizations. 

Private money lending on interest is a punishable offence as per Article 458 and Article 459 of the UAE Penal Law. Individuals engaging in private lending can attract a fine of around AED 50,000 along with imprisonment for one year or more. In addition, if the offender is seen taking advantage of the borrower's weakness or need, this would be considered an aggravating circumstance.

With that said, a few private money lenders in the UAE are registered with the Government and are allowed to give loans to individuals and companies, provided the borrower qualifies the eligibility criteria and submits the required documents.

Eligibility Criteria for Private Loans in UAE

Financial institutions and banks require a high level of creditworthiness and the fulfilment of other requirements such as minimum income or age to consider you eligible for personal loans in UAE. However, private money lending companies have much more relaxed eligibility criteria, making it easier for potential borrowers to qualify for private loans. Some basic requirements include the individual being a resident of the UAE, having a valid ID, and so on.

Interest Rate for Private Loans in UAE

The foremost thing that comes to mind while obtaining a loan is the interest rate, as it can help you compute the monthly instalments of your loan. Private lenders tend to take advantage of the borrower's situation and charge high-interest rates on loans. Furthermore, if you are unable to make timely payments, the lender may increase the interest rates.

Private Money Lenders to get a Personal Loan for bad credit in UAE

Processing Time for Private Loans in UAE

Compared to the financial institutions in the UAE, the loan application process with private lenders in the UAE is fairly easy and quick. Since the eligibility criteria are not strict, they check your loan eligibility quickly and disburse the funds in a similar manner. 

Pros and Cons of Private Lenders in UAE

Some of the advantages of private money lending in the UAE are given below – 

• Tailored for Business in Niche Industries - Private money lenders in the UAE have a fair understanding of different sorts of industries and segments of the market, which enables them to meet the specific requirements of the borrowers.
• Speed-Up Application Process and Minimal Documentation - Private loan is generally sanctioned in a few minutes, with the funds being quickly disbursed as well. Moreover, since the eligibility criteria are not high, the requirement for documents is minimal. 
• Easy to Qualify - It is one of the great options for those unable to qualify for the loan provided by financial institutions in the UAE. If you agree with the interest provided by private lenders in the UAE, the probability of qualifying for a private loan in the UAE is substantially high.

Mentioned below are some of the known caveats of private loans in the UAE – 

• High-Interest Rates- Interest rates are much higher with private money lenders in the UAE than with conventional loans. 
• Risk Factor- Private Loan in UAE carries a high risk, and the lender might ask for a valuable thing or asset against the loan. In case you are unable to pay monthly instalments on time, the lender may even threaten the borrower.
• Short Payback Period- Private Loans do not come with a long repayment tenure like bank loans. Many private lenders in the UAE expect the loan to be repaid within a short time period. 

Top 5 Personal Loan Providers in the UAE

Private Finance Companies in UAE

Some popular private finance companies in the UAE are given below –

• Mawarid Finance
• MoneyDila
• Finance House

Disclaimer: Policybazaar UAE does not endorse private lending or any of the mentioned private lenders. The details in the article are for informational purposes only.

To Conclude

Before opting for a private lender in the UAE, you should be aware that private lending is illegal in the UAE barring a few registered lenders. Additionally, considering their high interest rates and fees, private loans can negatively impact your finances in the long run. 

To avoid such a difficult scenario, you can instead start working on your credit Score and improving your income so that you are able to borrow from the top banks in the UAE. You can improve your credit score by being punctual with loan instalments, credit card dues, and other bills. With a high credit score, you can easily get loan approvals at favourable terms as well.