Unless you have a considerable amount of disposable income sitting in your bank account, the most likely option you’ll choose for buying a new or pre-owned car in the UAE is to take out a loan. There are a few things to consider before you do so, though, including some specialist options available only from Lexus. So, before you sign on the dotted line, here are a few words of advice on taking out a car loan in the UAE.
Make sure you qualify
Before you step into your nearest dealership, you will need to make sure you qualify for a car loan. They are available for both new and pre-owned vehicles. Once you take out a car loan, it is mortgaged to a bank and is their loan until it is settled. Rather than contacting the bank yourself, most car dealerships will be able to arrange the process for you, as long as you have a full licence, are above 21 years old, and earn a regular income of at least AED 3000.
Most banks will provide up to 80% of the finance required to buy a car in the UAE. The remaining 20% is a down payment made by the customer, although some dealers offer special deals with a reduced or no down payment that can make buying a car much more affordable. You'll also need to remember that the vehicle you intend to buy must be valued at approximately AED 25,000 as a minimum.
It’s best to make sure you have at least 20% of the price of the car you want to buy ready to use as your down payment before you apply for finance.
What documents do you need?
As well as your driver's licence, you'll need to be able to produce a salary certificate, bank statements for between three to six months, and an Emirates ID. This last piece of paperwork is essential and must be produced on the day. If you are currently renewing your ID, you will need to wait until your new ID has been issued before you apply for a car loan.
How long do loans usually last?
It depends on whether you're buying a new or a pre-owned vehicle. New vehicles often have a longer finance period than a pre-owned vehicle, but it is possible to get a maximum loan period of up to 60 months or five years to spread the cost.
How much will you pay?
Most car loans are arranged with EMIs or Equal Monthly Instalments. This amount is agreed with your dealer at the time you take out the loan. The amount will depend on the price of the vehicle, the down payment subtracted from the remaining balance, and the interest rates. The advantage of EMIs is knowing exactly how much you'll pay every month.
What alternatives are there?
At Al Futtaim Lexus, we have an alternative – Lexus Solutions. This flexible way to own a luxurious Lexus puts you back in control of your finances. Choose the Lexus you want to drive, decide the average annual kilometres you think you'll drive, pick either a 24 or 36-month term, and pay a deposit. At the end of your agreement, you have three options:
Renew – This is your chance to upgrade to a brand-new model. Bring your old Lexus back and drive away with a new one with a new Lexus Solutions deal.
Return – If you don't want to upgrade, you can return your Lexus, and we'll pay you the pre-arranged Guaranteed Future Value amount. This is the amount your Lexus will be worth based on the terms of your agreement and the number of kilometres you have driven each year.
Retain – If you’ve fallen in love with your Lexus, you can keep the car at the end of the agreement by paying the final instalment. The vehicle is then yours to do with as you want.
If you'd like to learn more about Lexus Solutions, contact us today and talk to one of our professional advisors. You can also book a test drive and arrange your finance online, making it even easier to own the Lexus you’ve always wanted.