Applications for Islamic car loans in the UAE grew significantly in 2016, with Islamic auto loan products occupying three of the top five spots on the year’s most-applied-for list.
According to an analysis from yallacompare.com, the Middle East’s leading financial comparison site, the number of users applying for Islamic car loans increased by 64.79% from 2015 to 2016. Data gleaned from the company’s car loan comparison portal reveals that Islamic car loan applications made up 45.09% of total car loan applications in 2016.
Despite growth in Islamic car loans, though, car loans based on traditional finance were more popular among UAE residents in 2016. Those earning under AED 20,000 per month overwhelmingly preferred Emirates NBD for car loans, while consumers earning over that number tended to prefer HSBC’s auto loans.
Emirates NBD’s Feature-Packed Auto Loan was the most applied-for car loan in 2016. That car loan was especially popular among residents earning under AED 20,000 per month, occupying the top spot in every salary bracket up to that number.
The HSBC Car Loan, meanwhile, was the second most applied-for auto loan of 2016, and appealed especially to those earning over AED 20,000 per month. This product occupied the top spot in every salary bracket above AED 20,000.
Overall, the third, fourth and fifth most applied-for car loans of 2016 were from Islamic banks. Emirates Islamic’s Auto Finance product came in third place, while Noor Bank’s Auto Finance and Ajman Bank’s Car Finance came in fourth and fifth respectively.
“While non-Islamic banks took the lion’s share of applications for car loans last year, Islamic banks are certainly making waves in this segment. This is down to a couple of factors. For one thing, many Islamic banks have broadened their offerings in recent years, offering competitive car loans featuring attractive rates and added benefits such as discounted takaful,” said Samer Chehab, COO of yallacompare.com.
“Secondly, because of the attractiveness of these offers, there’s a greater awareness among consumers of Islamic banks’ car loan products these days.”
compareit4me’s data also revealed that it was no more difficult for UAE residents to secure car finance in 2016 than it was in 2015. On average, users made 1.9 applications each for car loans in 2016 – a number unchanged from 2015’s figure. This suggests that many users were able to secure a car loan without applying for multiple products.
“This contrasts with the story told by our data on personal loans, which showed an average of 2.97 applications per user in 2016 – up 11.74% on 2015’s figure of 2.62 applications per user. When it came to personal loans in 2016, UAE residents had to make several applications to find finance,” said Jon Richards, CEO of yallacompare.com.
“As we explained in our report on personal loans, the liquidity crunch caused by the low oil price, coupled with the resultant market uncertainty, was a big reason for banks’ increased unwillingness to extend personal loans. However, with car loans, it works a little bit differently, as you’re borrowing money against an insured asset. This makes the proposition just that little more attractive to lenders.”
Want to buy a car but don’t know the best way to finance it? Click the button below to compare car loans from the UAE’s leading lenders.I want a new car!