Everybody goes through a time when they need an urgent cash loan for some reason. It could be a medical emergency, an accident, or a family concern that needs an immediate financial solution. Fortunately, there are many places in Dubai where people can apply for loans, such as banks and lending companies.
Generally, most banks and lending companies perform a credit check before approving loans. But what if you prefer not to have a credit check? Is getting a loan still possible in this case? In this article, we will discuss how you can apply for a loan in Dubai, even without a credit check.
Getting a Loan Without Credit Check in Dubai
Before we explore the ways in which you can get a loan without a credit check, let us first talk about what a “credit check” actually is and why it is so important. In addition, we will also discuss about “credit scores.”
What is a Credit Check?
What exactly is a credit check? Before a bank approves any type of loan, it conducts a credit check on the applicant first. Specifically it evaluates the applicant’s credit report, which is provided by Al Etihad Credit Bureau (AECB).
The credit report contains information about the applicant’s financial condition. It includes data about his/her monthly income, past loans, current loans, number of credit cards, and so on. It presents an overview of the applicant’s timeliness in paying utility bills, credit card bills, and loans. Moreover, the credit report contains the applicant’s credit score.
The bank looks at all of these details to help determine the applicant’s financial stability, as well as his/her ability to repay if the loan gets approved.
Good vs. Bad Credit Score
As mentioned earlier, the credit report contains the applicant’s credit score. This is a number, ranging from 300 to 900, that is used to assess a person’s “credit worthiness.” Banks and lending companies use this number to help decide whether the applicant’s loan should be approved… or rejected.
How is the credit score assessed? Here’s the general rule — the higher the score, the higher the probability of a loan approval. In most banks, a credit score of at least 580 may be considered “good.” It means that the applicant usually pays his/her bills and loans on time. If this is the case, then his/her loan application may be approved, and he/she may even be given a favorable interest rate.
On the other hand, if the credit score is low, there is a lesser chance of getting a loan approved. You see, a “bad” credit score could mean that in the past, the applicant failed to pay his/her bills and loans regularly. Hence, his/her application may be rejected. There is a possibility that the bank may still approve the loan, but the interest rate would be higher compared to the loan interest rate of a person with good credit score.
How to Get a Loan Without Credit Check
So far, we’ve learned that most banks and lending companies look at a person’s credit score before approving loans. But what if you prefer not to have a credit check? Is it still possible to get a loan? Well, yes, it is!
If you need money but you’d rather not have your credit score checked, you can consider the following options: salary advance, secured loans, credit card loans, and peer-to-peer lending. Let’s take a look at each one!
1. Salary Advance
If you are employed and you receive salary regularly, you could opt for a salary advance. In other words, you could take out a loan against your monthly salary. It is sometimes called a “payday loan” because the loan is usually paid automatically — as soon as you receive your salary. The loan may be paid in full or partial installments, depending on the terms between you and your creditor.
Well-known banks such as Dubai Islamic Bank, Emirates NBD, and RAK Bank usually provide loans against a person’s salary. The interest rates on these loans are actually quite competitive and not too high!
2. Secured Loan
Getting a secured loan is another option for whose who prefer loans without credit checks. Basically a secured loan is one where the applicant provides collateral, such as his/her car, gold jewellery, and other assets. In case the person is not able to repay the money, the bank can recover the loan amount from the security (i.e. car, gold, etc.) that was offered.
3. Credit Card Loan
As the term suggests, this type of loan is taken out against a person’s credit card. In other words, his/her credit card is considered as an asset. However, credit card loans usually involve a higher interest rate, so think carefully before trying out this type of loan.
4. Peer to Peer (P2P) Lending
Peer to peer lending, a.k.a. “P2P lending,” is a platform where people can meet and lend/borrow money. It is somewhat like “private lending,” wherein an applicant applies for a loan from an individual, and not from a bank or lending company.
Some private lenders may require a credit check, although there are lenders who are willing to lend money even without credit checks. Typically, they would just ask for an identification card or document, and that’s it.
That being said, P2P lending or private lending usually involves high interest rates. Once again, caution must be taken before you decide to engage in such platforms.
Beware: Loan Sharks
When getting a loan, the safest and most legitimate option is to apply through a bank or a lending company that is accredited by the Central Bank of the UAE. Otherwise, you may end up with a “loan shark” — persons or entities that provide instant money, but at super high interest rates.
When you fail to make a payment on time, a loan shark would not hesitate to collect money from you “aggressively” — to the point that your peace and safety could be compromised. To avoid such situations, it is best to do your research and apply for loans only though legitimate sources!
As you can see, there are several ways to apply for a loan without a credit check, but the interest rates — and the financial risks — are usually higher. Before you decide to get a loan with any of the methods stated above, be sure to consider everything, and avoid loan sharks at all costs!
Better yet, focus on getting a good credit score. This way, when the time comes that you truly need a loan, you can go to a reputable bank and be assured of competitive rates and “legit” terms and conditions.
Meanwhile, if you are an employee who earns at least AED 3,000 per month, there are banks that offer personal loans for people with that salary amount. Here’s a list of personal loans in the UAE for those with AED 3,000 monthly salary.