A personal loan is classed as a lump sum of money that is borrowed from a bank for various personal uses. There will then be terms and conditions applied to the loan to repay what has been borrowed back to the institution, which are pre-agreed by both parties involved.
What can Personal Loans be used for?
If you’re getting a personal loan in UAE, it might be because you’re an expat who has moved to the region and need to pay for accommodation, a new car, schools for your children, or even just for living expenses while looking for a job. Personal loans can be used for used a range of things – either to help you out in a sticky spot, or start a new venture. But they are defined as being loans for personal use.
A secured loan is usually for something such as a home or a car, with the said item being used as the collateral which the loan is secured against. This basically means that the bank secures the loan against what you are lending it for, and can, in effect, take this as payment in the event that you should default on the loan repayments.
Unsecured loans are usually decided by running a credit check against the applicant first, which assesses their credit history to identify whether they would pose a risk in any way to the bank if they gave them the loan. It is likely that they will ask what the loan is for, and there will also be a higher interest rate in line with the increased risk the bank are taking by not securing the loan against property in exchange for the loan.
Repayment options and interest rates
Your repayment options on the loan will depend on how much you want to borrow, over what length of time you would prefer to pay it back, and with which interest rate. Therefore, if you wish to pay it back quickly, then you’re likely to pay more in monthly instalments, but less in interest over time. Whereas, if you choose to pay it back over a longer period of time, then your instalments will be lower, but you’ll end up paying more back over time.
A personal loan calculator is the best way of deciding which way to manage your repayments. It helps give you a clear picture of your options, by showing you instantly an estimate of the amounts you’ll pay back, based on your repayment preferences.
Fast and easy online applications
These days applying for a personal loan in the UAE couldn’t be simpler – with online forms, which take minutes to complete, and a decision within days, it’s quicker than it’s ever been before to get a quick loan. So if you’re stuck for cash and need a decision sooner rather than later, it’ll only take you minutes to get started on the application process.
Proceed With Caution
While taking out personal loans is quite a common method for obtaining the items you need, it is not always the best solution to your money problems. Prior to taking out a loan, consider the costs of interest and of merely spending money before you even have it. If you could possibly pay for your expenses with excess cash, this is often the best option.
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