1. What is Loan Eligibility Calculation?

The loan eligibility calculator determines the maximum principal amount you can borrow based on your affordable monthly payment, interest rate, and loan term. This helps UAE residents understand their borrowing capacity before applying for personal loans.

2. How Does the Calculator Work?

The calculator uses the present value of an annuity formula:

Where:

• \( P \) — Maximum loan amount (AED)
• \( PMT \) — Affordable monthly payment (AED)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the present value of a series of future payments (your monthly installments) at a given interest rate.

3. Importance of Loan Eligibility

Details: Knowing your maximum eligible loan amount helps in financial planning, prevents over-borrowing, and ensures you can comfortably afford the monthly payments without straining your budget.

4. Using the Calculator

Tips: Enter your comfortable monthly payment amount, the annual interest rate offered by the lender, and your preferred loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical interest rate for UAE personal loans?
A: Rates typically range from 3.5% to 20% annually depending on your nationality, salary, employer, and credit history.

Q2: How does loan term affect eligibility?
A: Longer terms increase eligibility (lower monthly payments) but result in higher total interest paid over the loan's life.

Q3: What factors affect my actual loan approval?
A: Banks consider salary (minimum AED 5,000-8,000), employer reputation, existing debts, credit score, and nationality.

Q4: Are there fees not included in this calculation?
A: Yes, processing fees (1-3% of loan amount), insurance, and early settlement fees may apply.

Q5: What's the maximum loan term in UAE?
A: Typically 48-60 months for personal loans, though some banks offer up to 10 years for specific loans.