At some point in your life, owning a car becomes a necessity. However, you may not have the necessary finances to make the purchase with a full down payment. Luckily for you, there is a solution: auto loans.
Here, let’s take a look at the 5 essential things you need to know about auto finance in Kuwait.
1. What is an auto loan?
A typical auto loan is when a bank uses its money to purchase a car on your behalf, and you have to pay back the loan amount over a certain period of time. This applies to new and used cars, as well motorcycles and other recreational vehicles.
2. What are the different types of auto loans?
There are predominantly 3 types.
In a finance lease, a bank will purchase the car and then lease it to the motorist (you). This allows you to immediately use the car with little to no capital expense upfront.
Usually, finance leases are provided to businesses, where the car is used for mainly business purposes.
In this type of loan, you will pay a fixed monthly payment and you are financially responsible for both the maintenance and trade-in residual risk of the car.
When the lease period ends, you can refinance, sell, return or buy the car by putting up the remaining amount.
Here, there is an agreement between the bank and the motorist.
The bank purchases the vehicle and rents it to you, the motorist. However, you have no risks associated whatsoever with ownership, including the residual amount at the end of the period.
At the end of the term, you have the option to buy the car, continue to rent it or change to another car.
This is easily the most popular type in Kuwait. In this case, you take bank loan to purchase a car. Although it’s the simplest kind, make sure you are financially stable before opting for this.
In Kuwait, you can avail up to KD 25,000 over a maximum repayment period of 5 years. You need to show a minimum salary of KD 400 per month.
The interest rate on the loan is 6% per annum.
Here, the car is the security for the loan, so it will have to be fully insured. In the event of the owner’s death, the insurance company settles the outstanding amount.
You are only required to pay the monthly premium, which depends on your loan amount.
3. How do you apply for an auto loan?
It’s simple. Just apply online on the bank’s official website with your full name, nationality, date of birth, email and civil ID. The bank’s representative will contact you, after which you will have to go there with the documents mentioned below.
4. What documents do you require to get an auto loan?
These are the mandatory documents you will need:
- A copy of your Civil ID
- A Kuwait Military ID (for MOI, MOD and National Guards)
- A salary certificate
- For expatriates, a copy of your passport copy is required
5. What are the benefits of an auto loan?
There are multiple benefits of taking an auto loan here in Kuwait. Here are the main ones:
- Quick loan approvals
- Salary transfer is not required
- You can avail a free bank account with no minimum balance
- The funds will be directly transferred to the car dealership’s account
With all the benefits mentioned above, taking an auto loan today has never been faster, easier and safer. So, what are you waiting for? Go ahead and get that dream car today!