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Your guide on how to zero in on the best auto loan It is common to get confused with multitude of car loan offers available. Khaleej Times helps you wade through the choices and select the one that’s meant for you. ■■ Suneeti Ahuja-Kohli
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he average age of a car in the UAE is about 5.2 years, almost half of what it is in the US where people use their car for about 11.5 years before thinking of buying a new one. Considering UAE’s fetishism for cars and the availability of easy finance on vehicles, there is a high probability that most of the people reading this article would be either planning to buy a car soon or already initiated the process. In case of the latter, we hope you have cut a good deal with the car dealership and the bank. However, if you are still exploring the options and deciding on which car to drive home, here are a few suggestions that might help you zero in on the best auto deal. Know loan details of partner banks: Every car dealer in the UAE, in fact it is true globally, usually has tie-ups with select banks for preferred interest rates on car/ auto loans. Once you have decided the make and type of the car to buy, sit with the company’s representative and know
all about the interest rates offered, minimum and maximum loan amount, duration of the loan, documents required, and moratorium period, if any. If you are not banking with the same bank, ask if there is a special or added bonus for transferring the salary to that bank, or if there is a charge for direct debit. Chances are fair that you might be able to get a better deal with other banks. Signing up for the first readily available loan product will leave you vulnerable to whatever terms and conditions imposed by the dealer or the partner banks. Therefore, explore more before you make a commitment. We advice you to run through loan choices available from other banks, and read through the terms and conditions to know pertinent details. While you are at it, also note if there are any charges for prepayment, or deferred payment. Such information on hand will give you the bargaining power and flexibility to negotiate the best offer possible on the interest rate, loan amount, tenure or freebies attached with the product. Where to shop for loans? Information is the key. Once you know the details of the
Chances are fair that you might be able to get a better deal with other banks. Signing up for the first readily available loan product will leave you vulnerable to whatever terms and conditions imposed by the dealer or the partner bank. foreign banks sometimes have a higher interest rate. The Union National Bank (UNB), for instance, offers car loans at competitive rates and has an easy processing facility.
car loan offered by the dealer’s bank, compare it with other banks. With the power of Internet, it is easier than ever, literally with the click of a button. Several comparison websites in the UAE offer exemplary services that pin down the difference between loan products and
also state if there are any incentives or features to be wary of in certain schemes. Some of these websites are www.souqalmal.com, www.moneycamel.com, www.compareit4me.com, www.bayzat.com, etc. Compare the difference between deals offered by local and foreign banks;
Loan or cash: The interest rate environment in the UAE is still benign; interest rates on auto loans range from 2.5 per cent to 3.5 per cent (flat rate). It, therefore, makes more sense to use credit facilities such as auto loan products to purchase new vehicles rather than cash. If you have cash, it can be deployed in other avenues for greater interest opportunities or better returns. When signing up for the loan, keep in mind the tenure. A lower tenure translates into a higher EMI (equated monthly instalment), but ends up saving some money on the interest. Higher the tenure, higher interest you would end up paying back. Even though banks in the UAE offer a maximum tenure of about 60 months, keeping the tenure to the minimum possible would help you save some dough! —suneeti@khaleejtimes.com