How to Get a Car with No Credit or Cosigner In UAE?

Buying and selling cars in the United Arab Emirates is strikingly similar to that of the US and other countries. First-time and credit-challenged buyers in the UAE face the same challenges and roadblocks when trying to purchase a vehicle when there is no cosigner and very little or bad credit.

Living in metropolitan areas of the UAE, such as Dubai, is similar to life in New York or London, where there are thousands of taxis and Ubers. However, these alternatives don’t beat the freedom factor of owning a car.

UAE is a fast-growing, vibrant region of the world. Cities such as Dubai offer a growing economy, excellent education, and a healthy job market. To take advantage of these opportunities, transportation is a must!

Many expats and residents of the UAE have no car credit or bad credit, and unfortunately, they believe there is little hope, just like in New York and London. The hopeless feelings are profoundly untrue.

The challenge for any lender is that “le buyer has no history of paying back a car loan, or they have bad credit.” The dilemma for millions of potential borrowers is: “How do you get a history of paying a car loan back if no one will lend you the money?”

This article offers financing tips and options, along with a few alternative methods of purchasing a vehicle.

Understanding the UAE Car Market

The UAE’s automotive industry is a primary driver of the country’s economy. Toyota is the leading brand sold in the Arab nation, offering its full lineup of cars, trucks, and SUVs. The luxury segment accounts for nearly 15% of all sales and a majority of cash transactions. Governments are committed to taking full advantage of the rising EV technologies.

Financing options are similar to those in other areas of the world. The UAE uses a credit scoring system similar to that of the United States, where bad credit is between 300 and 619, good credit is 680 to 730, and excellent credit is above 731. Banks, financial institutions, dealerships, and commercial organizations use the Al Etihad Credit Bureau to evaluate a person’s ability to repay a loan.

Although the lending clauses and other terminology may be slightly different in the UAE, terms, repayment, and income requirements are identical to those of other banks worldwide.

Financing Options

Banks and other financial institutions offering car loans are plentiful in the UAE. These mega banks offer every type of loan any individual or commercial organization would need, including mortgages, personal loans, vehicle financing, and more.

Another aspect of financing in the United Arab Emirates is the Shari’ah requirements. Some institutions have separate entities for those customers who want to finance a car loan under Shari’ah law.

Shari’ah Compliant

● Must follow Islamic Law

● No interest is paid (interest is deemed riba and considered usurious and exploitive)

● Deposits or loan repayments are given to the bank as an interest-free loan.

● Another option: the bank purchases the car outright. The bank then sells it back to the borrower at a profit, and installment payments are made. This is called a “murabahah contract.”

Personal Loans

The UAE and other Arab countries are flush with cash. Personal loans are an extremely viable option for a person with no credit or limited lousy credit.

All the major banking institutions offer personal loan financing. However, several quality loan bazaar websites cater to personal loans of all types. In 2019, the average price of a car in the UAE was 102 thousand Emirati Dirhams or USD 27,770, so the financial burden is no different in the Arab world.

A private car loan has the exact requirements as a bank loan, or maybe even more so. However, the lender will consider negotiating if needed.

Cash is King

The fatal mistake most borrowers make when applying for a car loan is thinking they will be able to get the loan they want with little to no money down and the perfect car payment. That is never going to happen!

Without a substantial down payment of at least 20% or more, the lender will never take the deal. Again, the borrowing history is either inadequate or non-existent. A down payment of 30% to 50% will almost guarantee a loan because this puts the lender in a good equity position. Even if the borrower makes a first payment default, the lender can still sell the car for a profit.

Dealer Financing

Dealers may be interested in a loan if the borrower has other improved variables they can offer. Any credit score below 651 in the UAE is high risk. Therefore, the borrower must have a substantial income between AED 4000 and AED 7500 or above (USD 1089 and USD 2041) and stability to pay back the loan.

Again, a substantial down payment is always needed and is usually the deciding factor.

Lease to Own Program

Some banks and plenty of buy-here-pay-here organizations offer leasing to own a vehicle. With a central bank, the restrictions are a minimum income of AED 4000 and being a UAE national between 21 and 60.

Buy-here/Pay-here organizations are plentiful in the UAE, just like in the United States, and the advice is to be very careful with these companies. There are cars available on a lease-to-own program; however, the terms may be so restrictive that borrowers are placed in irrecoverable debt. For example, missing a day of a single payment adds several hundred dollars in fees. Be very careful with this option!

Importing Vehicle to the Emirates

Importing a car into the UAE is a viable option for many first-time buyers and those with questionable credit. Importers must be 21 years of age with a valid local driver’s license. The car cannot be more than 10 years old, and it must pass an inspection by the UAE’s Road and Transit Authority. Another odd stipulation is that the RTA cannot register right-side steering column vehicles.

Importing vehicles to the UAE offers significant cost savings and gives buyers a broader choice of vehicles. Shipping a vehicle has an average cost of $1050 to $2150 and should be handled by the many quality vehicle shipping services.

Importers must follow the rules set down by the shipping service, such as testing, insurance, and registration with the RTA. It is vital to ensure the car or truck is cleared of all personal belongings and the tires are properly inflated before a shipping service arrives at your door.

First-time and credit-challenged buyers will find more help with financing in the US and other countries. It is a viable option to purchase the vehicle with the help of relatives and personal connections in the United States and then have it imported to the UAE. Avail yourself of every possibility to find the right car with good terms.

Second-Hand Car Markets in the UAE

According to industry research services, the secondary car market in the UAE is enormous. It was approximately $20.15 billion in 2022 and is expected to skyrocket to over $48 billion by 2030.

Any first-time buyer or credit-challenged person can find transportation in the United Arab Emirates. Cars and trucks are cheap because of the turnover of expats. These citizens leave after a few years and then sell their vehicles at any cost, creating a heavy turnover.

Consider the Following Sources:

● AW Rostamani Pre-Owned Cars, Dubai

● Al Naboodah – Swaidan Motors

● Al-Futtaim Automall

There are literally hundreds of auto malls, single dealerships, buy-here/pay-here lots, and website resources to help the first-time buyer. Each of these dealers carries the most popular brands, including Toyota, Hyundai, Nissan, and Mitsubishi.

Leveraging Connections and Community

There are always friends, family, and work connections who are willing to help. In the United Arab Emirates, check the expat’s interest groups, such as InterNations, a global community organization that helps people connect in foreign countries.

ExPatForum is another web resource that helps people get acquainted when in Dubai and other cities in the UAE. ExPatForum is an extensive resource with hundreds of forum threads for all types of interests.

If someone with no credit is situated in the United Arab Emirates and believes nothing can be done, use the extensive resources mentioned above, and you can find the help you need!