Dubai: When it comes to taking a loan for a car, home, or property, there are a few factors you need consider, such as the interest rate, charges, fees and your credit score. Factoring all these conditions can sometimes make the task a little confusing, especially if it is your first time applying for a loan.
To make the process easier, the UAE’s Central Bank has drafted 14 essential questions you should ask your bank to make sure you are well-prepared.
Questions you should ask
UAE’s Central Bank strongly advises customers to carefully read the loan agreement or have a lawyer review the details before they sign it. This is because you must understand the terms and conditions, as a loan agreement is a legally binding document.
So, to ensure you are making a sound financial decision, ask the following questions first:
1. What is the loan term - the number of months or years that the loan will last for?
2. Does the interest rate change? If so, when? Do I receive a notice?
3. Will the loan be paid off at the end of the term? Question 3 is meant to confirm with the bank that there will be no unexpected charges at the end of the payment tenure.
4. What are the charges for obtaining the loan? Legal fees, appraisal fees, administration fees, inspection fees, or any other fee?
5. What are the fees and charges if I miss a payment?
6. What are the fees and charges if I want to change the payment amount?
7. What are the fees and charges if I want to renegotiate the loan?
8. What is the annual interest rate?
9. Does the payment include principal and interest?
10. What is the penalty amount if the loan is paid out before the loan’s termination date?
11. What are the fees and charges if I am late on a payment?
12. What are the fees and charges if I want to change the payment due date?
13. What are the fees and charges if I want to add a lump sum payment?
14. Are there any other fees?
Over the age of 55 and applying for a loan in the UAE? Here is what you need to consider
According to the UAE’s Central Bank, clients must be cautious when borrowing at or after the age of 55 (with an intention to retire), and to be sensitive to the allowable lending limit of 50 per cent of salary. This is because, after retirement, the client’s salary may drop below the allowable limit for the amount of debt still owed. This may lead to an inability to service the debt.
While there are no age restrictions on applicants who wish to apply for lending products like credit cards, car loans or mortgages, banks may reject your application for certain reasons. To find out what your possible options are for applying for these loan options after the age of 60, read our guide here.