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Life Events · Buying a Car

Car Financing

Understand your options before applying, from dealer financing to banks, trade-ins, and what to watch out for.

Learn · Concepts

Car Financing

Before applying for financing, it is essential to understand that the approved amount is not determined solely by your expected ability to repay; it also depends on your credit assessment. In the UAE, financing providers rely on data from the Al Etihad Credit Bureau (AECB) to evaluate your eligibility and determine an appropriate credit limit.

If you plan to apply with multiple lenders, try to group your requests within the same month. Too many scattered checks over time may reduce your credit score. Always review your AECB credit report before engaging with a lender to see if you are a credible candidate for a loan.

Types of Financing

There are many varieties of auto financing to choose from:

When you're financing your new car, it's important to know how pre-approved financing and negative equity will impact costs.

Pre-Approved Financing

Many lenders in the UAE will pre-approve a certain loan amount based on your income and credit history.

  • With a pre-approved loan, you'll know exactly how much you can afford to spend.
  • Pre-approvals are typically valid for 30 to 60 days.

Negative Equity

As soon as you drive a new car off the dealership lot, it instantly becomes a used car and its value continues to decrease.

  • In the UAE, luxury cars often lose value quickly in the first year.
  • While the value of your car drops immediately, what you owe on your loan decreases more slowly.
  • If you owe more than the car's market value, you have negative equity.

You can avoid negative equity by following these tips:

  • 1 Buy a car that you can truly afford.
  • 2 Keep your car until it is fully paid off.
  • 3 Pay off your loan sooner by choosing a shorter loan term (3-4 years) or making extra payments if allowed.
  • 4 Make the largest down payment possible to offset depreciation and increase positive equity.
This content is for general educational purposes. Individual financial circumstances vary. If you need personalised guidance, consider booking a free session with a financial counselor through Zoud.