Article (3) Car Loan
C 29/2011 Effective from 29/3/2011a) Car Loan: Is a loan extended by the bank or the finance company to its customer for the purpose of purchasing a private car.
b) Car loan shall be treated as separate from the personal consumer loan, and should not exceed (80%) eighty percent of the value of the financed vehicle.
c) Repayment Period: The maximum period for repayment of the loan shall be (60) months.
d) Security: This loan should be secured by a mortgage over the car.
e) Car loans extended to sole proprietorship firms and companies, secured by salary of the owner or salaries of the partners shall be treated the same way this loan is treated, and shall be subject to the same terms and conditions.
f) This loan shall be extended as per an application by the customer and approved by the bank or the finance company, and it should be drafted in the manner set out in Article (12) of these Regulations.
- Banks may finance passenger new and used cars to the extent of 80% of their value. Financing of commercial vehicles is outside the purview of these regulations unless repayment of the loan is from the salary of the customer and other laid down criteria are satisfied.
- Financing of operating leases to individuals would not be considered as car finance and would not fall within these regulations.
- Car loans may be allowed in addition to the personal loan as above but within the 50% of gross salary and any regular income as explained in Article (7).