It increased more than once over the course of 2022 by 1 to 2% above 2021 rates

Two bankers: The demand for car financing is still strong, despite the interest rate hike

• Car financing is the only type of financing that has quickly absorbed the effects of the interest rate hike.

  archival

• Tamer Abu Bakr: “The interest rate on financing varies according to the salary and whether the car is new or used.”

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Two bankers confirmed that the demand for car financing in the country is still strong despite the interest rate being raised more than once throughout the year 2022, by 1 to 2% above the rates that were in force during the past year.

They told Emirates Today that the banks raised interest rates at approximately the same rate due to the main interest rate hike by the Central Bank, noting that car financing is the only type of financing that quickly absorbed the effects of raising interest compared to other types of financing in the banking sector.

They explained that the interest rate ranges between 2.25 and 3.45% currently, depending on the customer’s salary and the entity in which he works, compared to 1.99 and 2.25% in 2021.

Interest rate

In detail, banker Tamer Abu Bakr said that the car market in the UAE is active and characterized by high dynamism with the presence of the best and latest models, indicating that this is accompanied by a strong demand that banks meet with immediate financing in a period that does not take three days as a maximum and sometimes many times less than that.

Abu Bakr explained that the interest rate on financing varies according to the customer’s salary and whether he is a citizen or resident, and that new cars differ in the interest rate on financing them from used ones.

And he indicated that the interest rates are currently circulating between 2.25 and 3.45%, and they can increase or decrease slightly, but in any case they are 1 to 2% higher than what was in effect in 2021, when the rate ranged between 1.99 and 2.25%, stressing that despite this Demand for auto financing remains strong.

momentum

For his part, the banker, Mustafa El-Gammal, said that the effect of raising interest by the Central Bank on the financing request was temporary and was quickly absorbed, so that the momentum returned to what it was, given the importance of the car for individuals and families alike.

He added that banks offer almost the same profit rates, so there are no options in the market for the customer, indicating that the raise came from the Central Bank and moved to all types of financing, but it can be said that the car financing branch was not affected and demand continued strong during 2022.

regional centre

Al-Jamal stressed that the UAE market is distinguished as a regional trade center, pointing out that all agencies operating in the country are keen to provide the latest models and types that satisfy all tastes and meet the needs of all.

He said, "It is natural for banks to support this and provide immediate financing as long as the conditions they set are completed in accordance with their internal policy and the instructions and directives of the Central Bank."

Al-Jammal pointed out that the customer can take financing for a car, whether new or used, provided that it is a 2017 model or later, but before that, banks usually refuse.

• The interest rate ranges between 2.25 and 3.45% now, compared to 1.99 and 2.25% last year.

• Banks raised the interest rate in almost the same proportions, which limits the options for the customer.

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