Do's and Don'ts of Personal Loans It is also comparatively simple to procure a personal loans because of easy documentation and also because UAE banks are mostly non-interfering when it comes to the purpose for which you want the money. Additionally, the money grant is made available to the borrower within 24 hours. Here are few things to consider before taking out a personal loan in UAE.
- Take a Loan You Can Afford to repay – Borrowing money to fund a vacation is not a wise thing to do especially if your financial condition is not strong enough to repay the borrowed amount on time. Asses your present financial situation and your future financial goals which may include responsibilities such as child's education, repayment of existing debts and more. Note that repayments are to be made in full and not in parts.
- Know the Type of Interest Rate – There are two types on interest rate at which banks in UAE offer loans: flat rate and reducing rate. A flat rate is a rate where the amount of interest is fixed and does not decrease /reduce as time passes by. A reducing rate is calculated on outstanding balance each year unlike the flat rate which is calculated on the principal amount. Calculate the interest at both the flat rate as well reducing rate and then choose accordingly because a reducing rate may be more than a flat rate but in reality you may actually have to pay lesser interest.
- Don't Borrow More to Get Less Interest – You might find yourself lured to borrow more than requirement in order to get a lesser rate of interest. This is not a wise thing to do especially of you are not certain of your future financial prospects.
- Review the Terms – review the terms and fine print policy. Look for closure charges, service charges and inquire for any processing fees that might be charged. You may also have to pay 1% fee for repaying your balance amount early.
- Check for Added Products – Your Bank may sign you up for credit protection insurance while you take a personal loan in UAE. This policy will be used to repay the borrowed amount in case you end up being a defaulter. Moreover an insurance policy is not required for a small amount or for a short period.