When getting this type of personal loan, you are required to provide security to the concerned banking institution. In plain terms, you have to keep collateral against the borrowed amount. Some banks in the UAE offer secured personal loans against your car, home, fixed deposit, and others. To maintain transparency, you must submit the valid documents of the asset that you wish to keep as collateral. ...read more
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Reviewed ByRavindra DhakarProduct Manager
Ravindra Dhakar
Product Manager
With 4+ years of experience in banking and financial services, Ravindra Dhakar serves as a Product Manager at Paisabazaar.ae, specialising in banking and finance products. He is adept at developing customer-centric financial solutions, optimising product strategies, and driving innovation across lending, payments, and consumer banking to enhance financial accessibility and user experience.
Wondering how is a secured personal loan different from an unsecured personal loan? Let’s understand in detail.
A multitude of factors decide whether you are eligible for an unsecured loan.
The term ‘Unsecured’ clearly says no collateral is required to get such a loan. In such cases, banks look into your financial profile and decide the lending amount and the applicable interest rate on your personal loan.
Generally, a secured personal loan in the UAE is an economical option due to its lower interest rates compared to unsecured loans.
Since the loan is backed by collateral, such as property or savings, lenders face less risk. It allows them to offer more competitive rates.
This reduced cost of borrowing makes secured loans an ideal option for large expenses, helping you save on interest payments throughout the loan term. Additionally, you can even get promotional offers, further lowering the overall cost of the loan and making it an affordable solution.
High Loan Amount
Secured personal loans allow you to access higher loan amounts than unsecured loans. Due to the availability of collateral, banking institutions are more willing to lend larger sums. This makes them suitable for financial needs like home renovations, education, or debt consolidation.
The availability of higher loan amounts provides flexibility and enables you to fund your expenses without needing multiple loans.
Loan Repayment Term
Secured personal loans often come with longer repayment terms compared to unsecured loans. These extended terms reduce the monthly repayment burden, which eventually helps you manage your finances better while repaying the loan.
The flexibility in repayment terms allows you to choose a schedule that aligns with your income and financial goals. Moreover, longer terms can result in smaller monthly payments, reducing the risk of default.
Easy Qualification
Secured personal loans usually have easier qualification criteria compared to unsecured loans. Banks are more likely to approve you as they are secured with collateral. Even with a lower credit score or less stable income, you may be eligible for a secured personal loan.
This accessibility makes secured loans a viable option for a broader range of borrowers, including those who might struggle to qualify for unsecured financing. Additionally, the collateral reduces the bank’s risk, leading to a more streamlined approval process.
Who Can Apply for a Secured Personal Loan?
Given below are the general eligibility criteria to apply for a secured loan in the UAE -
Criteria
Requirements
Minimum Age
21 years
Minimum Salary
AED 5,000
Employment Status
Salaried or Self-Employed
Nationality
UAE national or expat
What Documents Do You Need to Apply for a Secured Personal Loan?
Given below is a common checklist of documents required to apply for a secured personal loan in the UAE -
Emirates ID
Residence visa (applicable to expatriates)
Passport
Duly filled and signed loan application form
Pledge on the asset held with the bank
Note
Originals and a copy of each document must be presented
All documents must be valid
Additional documents may be required at the bank’s discretion
Is it a Good Decision to Take a Secured Personal Loan?
Taking a quick secured personal loan in the UAE can be a good decision depending on your financial situation and needs. Secured loans usually offer lower interest rates and more favorable terms compared to unsecured loans. Additionally, UAE banks offer competitive interest rates and flexible repayment terms, making secured loans an ideal option.
However, the decision should be made carefully. For instance, if you fail to repay the loan, you risk losing your collateral, which could include losses of significant assets. It's essential to assess your ability to meet monthly payments and consider alternative options before applying.
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