Financing a used car in the UAE: deposit and rates

Most used cars in the UAE are bought with a bank behind them. The rules are set centrally, so the broad shape is the same wherever you borrow — what changes is the rate and how much the bank will lend on an older car.

The deposit

The Central Bank sets a minimum deposit of twenty per cent, which applies to nationals and residents alike.

In practice many banks ask for more on a used car — commonly twenty-five to thirty per cent — because they cap lending at seventy per cent of an older vehicle's value. The older the car, the more of it you are expected to fund yourself.

What it costs

Advertised rates on used-car finance generally sit between about 2.5 and 4.5 per cent, quoted as a flat rate.

Flat is the word that matters. A flat rate is charged on the whole original amount for the whole term, not on the balance you have left. A four per cent flat rate over five years is far closer to seven or eight per cent in the terms most people are used to. Ask for the reducing rate if you want to compare two offers honestly.

What banks ask of you

A valid residence visa, a salary that typically needs to be at least AED 5,000 to 7,000 a month, and a clean credit record.

There is also a ceiling you cannot negotiate: your total monthly debt repayments may not exceed half your income, and a car instalment alone is usually held to around a third. If you already carry a personal loan or a large credit card balance, that is what limits the car, not the car's price.

Cash or finance

The honest answer is that it depends on what the cash would otherwise do.

Financing keeps your savings intact, spreads the cost, and — for a resident with no UAE credit history — builds a record that matters later for a mortgage. Paying cash avoids the interest and the arrangement fee entirely, and sellers will often take less for a payment that clears immediately.

One asymmetry worth knowing: a financed car carries a mortgage on the registration, and that has to be cleared before the car can be sold or exported. A cash car can be sold the same afternoon.

Before you commit

Get the loan approved before you agree a price. It tells you what you can actually spend, and a buyer who can pay this week has more room to negotiate than one waiting on an answer.

Rates and conditions change, and every figure here is a market range. Your own offer depends on your bank, your salary and the car's age.