What is a Secured Personal Loan in UAE?

When getting this type of personal loan, you are required to provide security to the concerned banking institution. In plain terms, you have to keep collateral against the borrowed amount.

Some banks in the UAE offer secured personal loans against your car, home, fixed deposit, and others. To maintain transparency, you must submit the valid documents of the asset that you wish to keep as collateral.

Quick Secured Personal Loan: Explained

Wondering how is a secured personal loan different from an unsecured personal loan? Let’s understand in detail.

A multitude of factors decide whether you are eligible for an unsecured loan.

The term ‘Unsecured’ clearly says no collateral is required to get such a loan. In such cases, banks look into your financial profile and decide the lending amount and the applicable interest rate on your personal loan.

Loan Elements	Secured Personal Loan	Unsecured Personal Loan
Loan Amount	Based on the value of collateral	As per the applicant’s creditworthiness
Interest Rate	Lower than an unsecured loan	Higher than a secured loan
Requirement of Collateral	Yes	No
Repayment Tenure	Longer tenure	Shorter tenure

What are the Benefits of a Secured Personal Loan?

Here are the primary benefits of applying for a secured personal loan in UAE:

Economical Option

Generally, a secured personal loan in the UAE is an economical option due to its lower interest rates compared to unsecured loans.

Since the loan is backed by collateral, such as property or savings, lenders face less risk. It allows them to offer more competitive rates.

This reduced cost of borrowing makes secured loans an ideal option for large expenses, helping you save on interest payments throughout the loan term. Additionally, you can even get promotional offers, further lowering the overall cost of the loan and making it an affordable solution.

High Loan Amount

Secured personal loans allow you to access higher loan amounts than unsecured loans. Due to the availability of collateral, banking institutions are more willing to lend larger sums. This makes them suitable for financial needs like home renovations, education, or debt consolidation.

The availability of higher loan amounts provides flexibility and enables you to fund your expenses without needing multiple loans.

Loan Repayment Term

Secured personal loans often come with longer repayment terms compared to unsecured loans. These extended terms reduce the monthly repayment burden, which eventually helps you manage your finances better while repaying the loan.

The flexibility in repayment terms allows you to choose a schedule that aligns with your income and financial goals. Moreover, longer terms can result in smaller monthly payments, reducing the risk of default.

Easy Qualification

Secured personal loans usually have easier qualification criteria compared to unsecured loans. Banks are more likely to approve you as they are secured with collateral. Even with a lower credit Score or less stable income, you may be eligible for a secured personal loan.

This accessibility makes secured loans a viable option for a broader range of borrowers, including those who might struggle to qualify for unsecured financing. Additionally, the collateral reduces the bank’s risk, leading to a more streamlined approval process.

Who Can Apply for a Secured Personal Loan?

Given below are the general eligibility criteria to apply for a secured loan in the UAE -

Criteria	Requirements
Minimum Age	21 years
Minimum Salary	AED 5,000
Employment Status	Salaried or Self-Employed
Nationality	UAE national or expat

What Documents Do You Need to Apply for a Secured Personal Loan?

Given below is a common checklist of documents required to apply for a secured personal loan in the UAE -

• Emirates ID
• Residence visa (applicable to expatriates)
• Passport
• Duly filled and signed loan application form
• Pledge on the asset held with the bank

Note

• Originals and a copy of each document must be presented
• All documents must be valid
• Additional documents may be required at the bank’s discretion

Is it a Good Decision to Take a Secured Personal Loan?

Taking a quick secured personal loan in the UAE can be a good decision depending on your financial situation and needs. Secured loans usually offer lower interest rates and more favorable terms compared to unsecured loans. Additionally, UAE banks offer competitive interest rates and flexible repayment terms, making secured loans an ideal option.

However, the decision should be made carefully. For instance, if you fail to repay the loan, you risk losing your collateral, which could include losses of significant assets. It's essential to assess your ability to meet monthly payments and consider alternative options before applying.

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