When times get tough and you need extra cash for an emergency or unplanned event, personal loans can be your best friend. The great thing is, the loans sector in Dubai seems to be heating up these days, and if you’re in need of an immediate funds, there’s a wide array of loan offers to choose from. If you have to take out a loan, set aside some time to shop around and compare loan packages.
However, the concept of a loan in Islam is somewhat different from what we are used to conventionally. Islamic finance is strict on specific terms. It has created an image of this form of finance as restrictive and against growth. However, a brief look at how financing works in Islam might help understand why it makes sense to many people.
The way banks work today, they take money from one party and loan it to another and charge an interest on it. This way, they use the money to earn a profit. In Islam, it is illegal to use money to earn even more money. That is because money is only considered to be a medium of transaction, while the regular banking system considers money itself to be a product.
Popular opinion says that in Dubai Islamic bank personal loan rules are somewhat difficult to apply and follow. In reality, it is a bit inconvenient in the short term but highly beneficial in the long term. Under an Islamic mortgage, there is no interest involved, because it means the lender would be earning money out of existing money. For this reason, Islamic banks ask for strict collateral against which they can issue their loans.
In order to make money by lending, banks make use of high-value items. If you need a loan, you sell an item to the bank at a certain price. The bank, in turn, sells the same thing to another buyer at a higher price, thus making a profit. The new buyer can buy it on installments. Again, there can be no interest rate charged for late payments. Hence, there is a strong need for collateral.
There are a number of Islamic banks located in almost all countries around the world. It is not difficult to find one in Dubai and other provinces of UAE either. People who want to follow their faith are increasingly opting for an Islamic loan rather than a conventional loan. It provides a number of added advantages. One of them is that you lose less money when compared to traditional loans with high-interest rates. Dubai Islamic Bank personal loans cover all kinds of investments including home and cars.
I hope you found this post useful and informative. Do you have any queries or suggestions related to this post? If you have any, feel free to leave your thoughts and opinions in the comment section below. I will try and answer all your questions and consider your feedback. Also, let me know if you want to find out more about Islamic Bank loans. I will be glad to share more insights with you.