Debt Consolidation Loan in UAE

debt consolidation
Debt Consolidation Loan

Want to consolidate your all Loans and Credit Cards Debt?

What is Debt ?

In Simple words, Debt means a sum of money that is owed or due.

Debt meaning In Banking terms.

A debt arrangement gives the permission to borrow money under the condition that it is to be paid back at a later date, usually with interest to the lender. 

Debt Consolidation With A Personal Loan: Pros and Cons

Personal loans are a sought after product due to their ability to fund various expenses. While for some it may be medical expenses, others might need it for miscellaneous expenses such as buying a car or moving into a new home. But a very useful feature of a personal loan is the ability to consolidate debts. Continue reading…

Read More:- 5 Crucial Life Situations That A Personal Loan Can Help You With

What is debt consolidation?

The term debt consolidation refers to the act of taking out a new loan to pay off other liabilities and consumer debts, generally unsecured ones. Multiple debts are combined into a single, larger piece of debt, usually with more favorable payoff terms. Favorable payoff terms include a lower interest rate, lower monthly payment, or both. Consumers can use debt consolidation as a tool to deal with student loan debt, credit card debt, and other liabilities.

What are the ways to consolidate debt?

There are several ways you can lump your debts together by consolidating them into a single payment. Given below are a few of the most common:

  • Personal loans are used to consolidate credit card debt are a way of turning multiple balances into a single monthly payment. These loans, which don’t require collateral, are available through banks, credit unions and a variety of online lenders. They give those with less than sterling credit scores a chance to convert revolving debt into a fixed monthly payment at somewhat lower interest rates.
  • Credit cards, Another method is to consolidate all your credit card payments into a new credit card. This new card can be a good idea if it charges little or no interest for a set period of time. You may also use an existing credit card’s balance transfer feature—especially if it offers a special promotion on the transaction.
  • Home equity loans (HELOCs) are another form of consolidation. Usually, the interest for this type of loan is deductible for taxpayers who itemize their deductions.

How can a personal loan help in debt consolidation?

Let us say that you have outstanding dues on multiple credit cards that are attracting a very high rate of interest, plus an existing high-interest personal loan. In such a case, it would prove meaningful to consolidate all the debt into one personal loan. To do so, avail a fresh personal loan from a bank that offers a lower interest rate. Use this loan to repay the credit card dues/other loans where you are bearing a high-interest cost. Also, make sure the new loan has beneficial features such as flexible repayment tenure, zero-prepayment charges, and zero foreclosure charges. This will make the process easy for you.

 

Pros of debt consolidation with a personal loan

There are several benefits to using a personal loan to consolidate debt, such as:

  • You could reduce your interest rate:

Personal loans can have lower rates than other kinds of debt. If you can qualify for a low-interest personal loan and reduce your rate, you’ll save yourself money on loan repayment.

  • You could lock in a low rate:

Sometimes when you borrow money, your interest rate is variable. This means that it is linked to a financial index, such as the prime rate. If the index rate goes up, your rate typically goes up too. If you are tired of owing money at variable rates, you could get a fixed-rate consolidation loan so that you will know exactly what your monthly payment will be each month.

  • You will have a fixed repayment timeline:

When you take out a personal loan, you agree to repay that loan on a set schedule specified in your loan agreement. Since you’ll have your loan term going in, you’ll know exactly when you’ll become debt-free if you pay on time. Be aware that if you want to pay off your loan early, your lender may charge a prepayment penalty.

  • You could boost your credit:

Your credit scores are based on a number of different factors, each with a different weight. For instance, if you are unable to pay your credit cards on time, that can negatively affect your payment history, which is an important factor. If you max out your cards, that can hurt your credit utilization rate. A lower utilization rate could help your credit scores. Thus, consolidating your debt with a personal loan could help your credit scores if it leads to a lower credit utilization rate and more on-time payments.

Cons of debt consolidation with a personal loan

There are some potential disadvantages to consider before you decide to use a personal loan to consolidate your debt. Here are some of them:

  • You may pay a higher rate:

There is no guarantee a personal loan will definitely have a lower interest rate than all the debt you pay off. If you consolidate any debt with a lower interest rate, you’ll raise the costs of repaying it. Use a debt repayment calculator to compare any potential savings.

  • You could end up paying more interest:

Even if you lower your interest rate, there’s a chance your personal loan could cost you more if you stretch out your repayment period for too long. If you use a personal loan with a five-year repayment term when you’d otherwise have repaid the debt in two years, you’ll pay interest for three years longer. This could mean you’ll pay more interest over time, depending on your loan’s interest rate.

  • You could have to pay fees:

Sometimes you have to pay to take out a personal loan. Depending upon your lender, you could end up owing application fees, origination fees or prepayment penalties if you pay off your loan early. These fees sometimes make consolidating your debt more costly than just continuing to pay back your current lenders.

  • You could end up deeper in debt:

When you pay off credit cards using the proceeds of a personal loan, you free up your line of credit. If you use these cards again and can’t pay off the balance, you could end up owing your original creditors again. But if this scenario occurs, you would have to pay off your consolidation loan, as well as a bunch of new debt, leaving you in worse shape.

There are a number of banks and financial institutions in UAE that offer personal loans for debt consolidation. These lenders charge a reasonable rate of interest and offer flexible terms that can make it easy for you to repay the borrowed sum. Ensure that you check your personal loan eligibility and credit score before approaching a lender for a personal loan.

List of Debt Consolidation loan offers in UAE in July'2020

fab logo first abu dhabi bank

FAB Debt Consolidation Loan for UAE Nationals

Features

  • Flexible repayment terms of up to 144 months
  • Variable and competitive interest rates available
  • Exclusively for UAE nationals who have a debt burden higher than 50% of their monthly salary

Document Requirements for a Debt Consolidation loan

  • Liability letter of all loans & Cards
  • Salary transfer letter
  • Bank statement (six months)
  • Copy of a valid passport/Emirates ID (originals must also be presented)
Mashreq Bank

Mashreq Bank Debt consolidation loans For Emiratis – Long Term And Debt Consolidation

Features & Benefits:

  • Lower monthly payments
  • Increased disposable income
  • Reduced interest payments over lifecycle
  • Higher Loan amount up to AED 5 Million
  • Long-term Loan tenor “Lower than active remaining tenor” and Debt consolidation tenor up to 48 months (for Armed Forces employees up to 60 months)
  • Deferred payment period of up to 120 days

Documentation required for Debt consolidation


Valid Passport Copy
Valid Emirates ID
Salary Transfer Letter from employer as per Mashreq format or Salary certificate for Government / Semi-Government
Latest 3 months Bank statement with salary credits / UAEFTS customer’s consent for bank statement

 
ADIB DEBT SETTLEMENT Smaller Installments

Abu Dhabi Islamic Bank [ADIB] Debt Settlement Finance

Features & Benefits

  • Low Interest rate starts from 3.44%
  • Grace period of 90 days for the 1st installment
  • postponement of up to 2 installments every year
  • High finance amount of up to 3 Million AED
  • Job loss protection
  • ADIB Visa cashback credit card as complimentary
 
standard chartered
  • UAE Residents working for companies approved by Standard Chartered
     
  • Minimum Salary: AED 30, 000 per month
     
  • Age:
    • Minimum Age: 21 years
    • Maximum Age: 65 years or company retirement age at loan maturity whichever is lower.
Proof of Retirement age in company required for any case where age > 60 years at the time of loan maturity.

This could be mentioned on STL, employment Contract

Documents Required for Standard chartered Bank Debt consolidation Loan

What is the Meaning of Debt ?

Debt means a sum of money that is owed or due.

What is Debt Consolidation ?

Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others, Consolidation is the process of combining all of your debts into a single, lower payment by taking out a loan to pay off your creditors.

Why Use a Debt Consolidation Service?

Sometimes you reach a point where debt becomes overwhelming. Late payments, Credit Card bills and personal emergencies can all add to a mounting amount of debt. If you are struggling to manage your debt but unsure of what steps to take, you can look into loan consolidation solutions offered by UAE Banks.,The goal of consolidation is to have a lower payment at a lower interest rate than you currently have.

<>Debt consolidation loans hurt your credit score?

It depends on the term, Generally Debt consolidation doesn’t hurt your score if you never have delayed any of the payments, Debt Settlements after delay payment history will hurt your credit score

Best Debt Consolidation Loan for UAE Expat Resident from UNB in 2019 – No longer Available 

Consolidate all your Loans/Cards in to One Loan-One Emi – Offer from Union National Bank

UNB Offers Expat Residents to Consolidate all your Loans including Personal Loans,Car Loans & Credit Cards Emis/Payments in to One EMI , One Loan from Union National Bank

Debt Consolidation Loans features : 

  • Liability settlement offer from Expat residents
  • Lower Monthly payments to 50% of your salary*
  • Quickly bundle all debts into one easy-to-manage loan*
  • Bring down interest cost substantially*
  • Higher Finance Amounts up to AED 2,000,000/-
  • Repayment Tenor up to 84 Months
  • High Eligibility to cover liabilities up to 30 Times of Salary

UNB Debt consolidation loan eligibility criteria:

  • Minimum Monthly Salary of AED 15,000/- 
  • Length of Service – Minimum 6 months or Confirmed Employee 
  • Employee of a UNB Approved Employer*
  • Having Loans/Cards from minimum 2 banks
  • Credit Repayment History of At-least 1 year of any loan or card*