1. What is the Loan Eligibility Calculator?

The Loan Eligibility Calculator determines the maximum loan amount you can afford based on your monthly payment capacity, interest rate, and loan term. It helps UAE residents understand their borrowing capacity before applying for loans.

2. How Does the Calculator Work?

The calculator uses the loan eligibility formula:

Where:

• \( P \) — Maximum loan amount (AED)
• \( PMT \) — Affordable monthly payment (AED)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Loan term in months

Explanation: The formula calculates the present value of an annuity (loan amount) based on fixed monthly payments over a specified period at a given interest rate.

3. Importance of Loan Eligibility Calculation

Details: Understanding your maximum eligible loan amount helps in financial planning, ensures you don't over-borrow, and improves loan approval chances by matching your payment capacity.

4. Using the Calculator

Tips: Enter your comfortable monthly payment in AED, the annual interest rate (%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good debt-to-income ratio in UAE?
A: Most UAE banks prefer a debt-to-income ratio below 50%, meaning your total debt payments shouldn't exceed 50% of your monthly income.

Q2: Does this include UAE bank processing fees?
A: No, this calculates principal only. UAE banks typically charge 1% processing fee + VAT on loans, which would reduce the actual disbursed amount.

Q3: What interest rates do UAE banks offer?
A: Rates vary (3.5%-20% annually) based on loan type, tenure, and your credit score with AECB (Al Etihad Credit Bureau).

Q4: What's the maximum loan term in UAE?
A: Personal loans typically up to 4 years, auto loans 5 years, and mortgages up to 25 years (subject to age limits).

Q5: How accurate is this calculator?
A: It provides a good estimate, but actual eligibility depends on your credit history, salary, employer, and the bank's specific policies.