Things to know about personal loans
How personal loans work
Personal loans in dubai are a type of installment loan. That means you take a fixed amount of money & pay it back with interest in monthly instalments over the life of the loan — which typically ranges from 12 to 60 months. Once you’ve paid your loan in full, your account is closed. If you need more money, you have to apply for a new loan.
2. Types of personal loans
There are two types of personal loans — .
Unsecured loansaren’t backed by collateral. The lender decides whether you qualify based on your financial history. If you don’t qualify for an unsecured loan or want a lower interest rate, some lenders also offer secured options.
Secured loansare backed by collateral, such as a savings account or FD. If you’re unable to make your payments, your lender typically has the right to claim your asset as payment for the loan.
3. Your credit score matters more for personal loans
With no collateral, all the lender has to go on is your personal creditworthiness. You can expect the available interest rates to increase steeply if your credit is average or poor, going up as high as 36 percent APR.
4. Personal loans vs. other lending options
Personal loan in UAE can provide the money you need for a variety of situations, they may not be your best choice. If you have good credit, you may qualify for a balance transfer credit card with a 0 percent introductory APR. If you can pay off the balance before the interest rate goes up, a credit card may be a superior option.
5. Impact on your credit scores
When you apply for a loan, the lender will pull your credit as part of the application process. This is known as a tough inquiry and will usually lower your credit scores by a few points.
6. Interest rates and other fees
Interest rates and fees can make a big difference in how much you pay over the life of a loan, and they vary widely from lender to lender. Here are some things to consider.
Interest rates: Rates typically range from around 3 percent to 36 percent, depending on the lender and your In general, the better your credit, the lower your interest rate will be. What’s more, the more drawn out your loan term, the more intrigued you’re probably going to pay.
Origination fees: Some lenders charge a fee to cover the cost of processing the loan. Origination fees typically range from 1 to 3 percent of the loan amount.