Should NRIs Avail Loans From India Or The UAE?

Non-resident Indians (NRIs), who live in the United Arab Emirates, often wonder about investment opportunities, taxes, and personal loans. It is only apt for you to be aware of everything associated with borrowings and investments. Before opting for a personal loan in the UAE or India, you must know from where all you can borrow, and which will be more beneficial. 

Opting for a loan in the UAE is relatively easy, in terms of accessing it. Moreover, if you choose UAE, you will not be disappointed with the interest rates banks across the UAE offer. In the UAE, interest rates are lower compared to the banks in India. 

So, considering these two aspects, you can seek a loan from an UAE bank. But, hold on! You must know a few more things about taking a loan in the emirates. 

Unarguably, UAE banks offer low-cost and easier borrowing compared to India. However, looking at the impact of several factors like currency fluctuation, analysts hint that it’s easier to say than get it done. 

To elaborate the statement, although the banks across UAE offer easy borrowing options at lower interest rates, things are not that easy as they look.  

Theoretically, borrowing from the UAE at lower interest rates sounds beneficial, but practically not so. However, here are some factors you need to keep in mind before availing of a personal loan in the UAE. 

Factors to Consider before Borrowing from the UAE banks 

Unsecured borrowing or personal loans are usually not cheap, and secured borrowing, on the other hand, requires collateral as a security. 

One of the major risks is currency fluctuation as investors are likely to make money on higher-yielding assets in India but prone to lose if the INR diminishes in value against the UAE dirham. 

Taxes in India is another factor to consider. Even though the gross return is high, the total return net of taxes is not high enough to borrow from the UAE and invest in India. 

Why an NRI should opt for a loan in the UAE? 

While Indian banks mostly offer loans at interest rates between 14% to 18% to personal loan seekers, in UAE it’s somewhere between 4% to 6%. 

Personal loan interest rates are cheaper in UAE because a loan in UAE dirhams is calculated in the US dollar. This means there is no currency risk involved in taking loans in the UAE in terms of the dollar. 

On the other hand, if you take a loan in India, it leads to constant hedging of the position and currency conversion charges. Hence, taking a loan in the UAE is cheaper. 

If you are looking for cheaper interest rates, then UAE is better than India for a personal loan. 

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