You’ve seen those shiny new wheels, it comes in just the colour
you’re looking for and that 4.8 litre engine is everything you’ve always
dreamed of.
Everything is perfect except the price.
Do
you stretch yourself? Take a budget-busting loan out on the spot, or
shop around for a cheaper loan? Like cars, the choices are bountiful
when it comes to taking out a car loan.
David
Smith, General Manager - Sales, Al Futtaim Finance, says, “Today there
are many ways for a customer to acquire a new vehicle, from regular
Higher Purchase (HP), Personal Contract Purchase (PCP) and leasing
options which are often referred to in the market with various names.”
However,
before signing anything, or getting carried away with the idea of
driving off in that dream motor, Smith has some important advice.
“Before
you walk into a car showroom, you should absolutely know what your
overall and monthly budget is. You must ensure that you can afford it;
you mustn’t overstretch yourself.
"You need to
understand the tenure of your loan, the terms and conditions and ensure
that you have complete transparency so that you are not signing up for
something that escalates in cost, or comes as a surprise at a later
date.
"In essence, you need to confirm that you
have a full understanding of how this finance product allows you to
purchase the vehicle.”
While you might only have
to go to one showroom to find the car you require, when it comes to
loans it often pays to shop around.
“Currently,
flat rates vary from just over 2 per cent all the way up to almost 6 per
cent,” advises, Jon Richards, CEO, compareit4me.com.
“This
highlights just how important it is that consumers compare all of the
car loans available to ensure they’re getting the best deal for them.
As
an example, someone borrowing Dhs 100,000 could find themselves
spending 10 per cent more in repayments if they don’t research and
choose a loan with a low rate.
Dubai Islamic Bank
(DIB) Auto Finance and Abu Dhabi Islamic Bank (ADIB) both offer flat
rates of 2.25 per cent. These are some of the best rates in the market
and offer consumers a wide range of options.”
While
currently the Islamic banks are offering some of the most competitive
rates, Richards says that they have seen an increase in the number of
applications for Islamic products, given the number of Islamic products
available in the UAE market.
Whichever loan you opt for though, getting the finance you require shouldn’t be too difficult.
Ambareen
Musa, CEO, Souqalmal.com, says, “Once you’ve decided which car to buy,
getting a car loan in the UAE is a fairly simple process. There is a
wide variety of car loans available – both conventional and Islamic.
"Most
banks offer loans for both new and used cars and finance up to 80 per
cent of the car value for a maximum tenure of five years.
"Even self-employed and non-listed companies’ employees have a fair number of car loans available to choose from.”
It
can take just eight hours to organise a loan, however getting the
vehicle ready can often take longer than the processing of the finance.
Smith
concludes, “We can currently get a bank to turn around a loan
application in eight hours, as long as all the information is available
and correct.
"Whether your choice of vehicle is
immediately available, in terms of colour and specification would be
another question as there are many combinations these days; however in
many cases delivery of the vehicle can be achieved within 72 hours.
"The
market is not quite at the stage of a customer walking into a showroom
and driving away with a new vehicle on the same day. However, we are
working towards achieving this.”
Things to consider
When you are buying a car with a car loan, there are a few things to consider.
Ambareen
Musa, CEO, Souqalmal.com, says, “When buying a car, it pays to be savvy
about how you finance it. Since it is a big purchase, you should take
your time to do the research.
"While finding the
cheapest rate is on most borrowers’ minds, one must also take into
account other parameters like processing fee, early settlement fee, and
salary transfer requirements.”
Before you enter the showroom it is important to know that in order to get any car loan you do require a minimum salary.
Musa
suggests, “All banks have minimum salary criteria for car loans. The
minimum monthly salary requirement starts at Dh3,000- Dh5,000 and can go
up to Dh10,000-Dh15,000. Be aware that loan rates are usually
advertised as ‘starting from’, so the rate offered to someone earning
Dh30,000 might be lower than the one offered to an applicant with a
salary of Dh5,000 per month.”
One tip that Musa has might help you secure that lower interest rate.
“Even
though salary transfer is not mandatory when applying for most car
loans, banks generally offer a lower rate to customers who transfer
their salary, since they’re considered as less risky borrowers to lend
to.”
With sites such as Compareit4me.com it is
now easier than ever to shop around for a competitive loan, simply with
the click of a finger.
Similarly, Musa suggests that there are approximately 74 different car loans from 21 providers listed on Souqalmal.com.
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