Best Car Loan Interest Rates In The UAE: Used & New Cars

Buying a new or used car will often involve financing or loans. In fact, more than 50% of cars bought in the UAE are under car loan schemes. The interest rates are less allowing buyers to own a car easily.

However, car loan interest rates vary depending on several factors. How do you get a car loan at the lowest possible interest rate in the UAE? Here are a few tips for getting lower interest rates for new or used cars. Before we proceed further let’s look at the current interest rates for car loans:

New Car Loan Interest Rates in UAE: Generally, new car loan interest rates in the UAE range from 1.84% to 5%, depending on several factors:

Standard Rates: 2.59% – 5%
Electric/Hybrid Cars: 1.84% – 4.75% (discounted rates)

Used Car Loan Interest Rates in UAE: They are generally higher than new car rates, ranging from 2% to 7%. Read this linked article if you are planning to buy a used car. Additionally, used cars that are older than 8 years are not eligible for finance in the UAE.

Now, let’s discuss the factors affecting the interest rates of a car loan.

Good Credit Scores

A strong credit score is your key to unlocking lower interest rates. Aim to maintain a score above 700, as it demonstrates your responsible credit history and makes you a more reliable borrower. Building a good credit score takes time and consistent effort, so prioritize timely bill payments and manage your credit responsibly.

Loan Down Payment

A larger down payment translates to a lower loan amount, reducing the lender’s risk and potentially securing a lower interest rate. Aim for at least 20% of the car’s value as a down payment, but remember, a higher down payment can significantly impact your budget.

Car Loan Tenure

Longer loan tenures might seem appealing due to lower monthly instalments, but they come at a cost – higher interest rates. The longer you take to repay the loan, the more interest you accrue. Opt for a shorter tenure if possible to minimize interest payments.

Exotic Cars

Luxury cars often come with higher interest rates due to their perceived higher risk and potential for depreciation. Consider your budget and prioritise affordability over brand prestige to secure a more favourable interest rate. Here is a list of the top 10 best upcoming luxury car launches in 2024.

Salary Account

Having a salary account with the lender can sometimes lead to preferential interest rates. Explore your existing bank’s car loan offerings and compare them with other options.

Islamic Finance

Islamic banks offer car finance options compliant with Sharia law, often with profit rates (instead of interest rates) that can be competitive. Consider these options if they align with your financial principles.

Dealership Tie-Ups

Some banks collaborate with specific dealerships to offer exclusive car loan deals with potentially lower interest rates. Explore these options if you’ve already chosen a particular dealership. Not sure which car to choose? Read this linked article to know the different shapes and sizes of cars.

Negotiation

Don’t settle for the first offer! Once you receive a loan proposal, negotiate the interest rate. Be prepared with research on competitive rates from other lenders and politely express your willingness to walk away if the rate isn’t satisfactory.

Consider Online Comparison Tools

Numerous online platforms allow you to compare car loan offers from various banks in the UAE. Utilize these tools to get a quick overview of available rates and identify potential options that fit your needs. Ready to buy a car? Check this beginner’s guide to automotive terms to help you understand your car better.

By understanding these factors and actively seeking out the best deals, you can navigate the car loan maze with confidence and secure an interest rate that fuels your dream drive without breaking the bank. Remember, the key lies in planning, research, and a healthy dose of negotiation!

Buying A New Car Or A Used Car In The UAE

We at DubiCars have the largest inventory of over 30,000 new and used cars listed for sale in the UAE. With a wide range of collections at your fingertips, you can compare, read reviews and choose your dream car. Most dealers offer attractive car loans at low-interest rates, making the purchase easier. Find used cars for sale in the UAE and new cars for sale in the UAE.