UAE Automotive Loan Market, By Vehicle Type (Two-Wheeler, Passenger Car, Commercial Vehicle), By Provider Type [Banks, NBFCs (Non-Banking Financial Services, OEM (Original Equipment Manufacturer), Others (Fintech Companies)], By Percentage of Amount Sanctioned (Less than 25%, 25-50%, 51-75%, More than 75%), By Tenure (Less than 3 Years, 3-5 Years, More than 5 Years), By Region, By Company, Forecast & Opportunities, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 24.72 Million
CAGR (2026-2031)	7.11%
Fastest Growing Segment	Banks
Largest Market	Abu Dhabi
Market Size (2031)	USD 37.33 Million

Market Overview

The UAE Automotive Loan Market will grow from USD 24.72 Million in 2025 to USD 37.33 Million by 2031 at a 7.11% CAGR. An automotive loan is a secured financial facility wherein a lending institution provides capital to a borrower for the acquisition of a vehicle which is subsequently repaid with interest over a stipulated tenure. The expansion of this sector is fundamentally supported by a rapidly growing expatriate population and extensive urban infrastructure developments that necessitate reliable personal mobility solutions for residents. According to the Central Bank of the UAE, in the first quarter of 2024, the demand for personal loans surged by 55.8 percent compared to the previous quarter which indicates a robust appetite for consumer credit facilities including vehicle financing.

Despite this positive momentum, the market encounters a significant impediment regarding the cost of borrowing. A primary challenge impeding market expansion is the prevailing high interest rate environment which elevates the total cost of vehicle ownership and reduces affordability for potential buyers. This financial pressure compels consumers to defer purchasing decisions or seek lower value alternatives which ultimately constrains the overall volume of new automotive credit issuance.

Key Market Drivers

Strategic Government Initiatives Promoting Sustainable Mobility are fundamentally reshaping the UAE automotive loan sector. The national leadership’s aggressive pursuit of Net Zero 2050 goals has catalyzed a regulatory shift towards green financing, prompting banks to introduce preferential interest rates and reduced down payments for electric vehicle (EV) acquisitions. This institutional support directly translates into higher credit demand for eco-friendly transport, as lenders adapt portfolios to accommodate the specialized needs of the green mobility segment. According to Gulf News, October 2025, in the 'UAE, GCC now among the world's fastest-growing electric vehicle markets' article, the sales of electric and plug-in hybrid vehicles in the country reached 24,000 units in 2024. Consequently, financial institutions are increasingly competing to capture this high-value segment through incentivized borrowing structures that align with public sustainability targets.

Robust Economic Stability and Rising Disposable Income further propel the demand for automotive credit by enhancing borrower confidence. A resilient non-oil economy empowers residents to commit to long-term financial obligations, driving a consistent increase in new vehicle registrations and subsequent loan originations. According to YallaMotor, March 2025, in the 'UAE Automotive Market in 2024' report, the sector expanded by 19.1 percent year-on-year, reaching a total volume of 330,532 units. This growth is not limited to luxury segments; the market is also witnessing a broadening of the borrower base due to the availability of value-oriented options. According to Arabian Business, March 2025, in the 'UAE automotive market posts over 15% growth' article, consumer inquiries for Chinese automotive brands surged by 77 percent in late 2024, indicating a dynamic credit environment where economic strength supports diverse financing needs across multiple price points.

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Key Market Challenges

The prevailing high interest rate environment functions as a substantial impediment to the growth of the UAE automotive loan market by directly inflating the total cost of vehicle ownership. When lending benchmarks remain elevated, financial institutions are compelled to price their automotive credit facilities at higher annual percentage rates to maintain margins. This transmission of monetary policy significantly increases the monthly repayment obligations for borrowers, thereby reducing the disposable income available to prospective buyers. Consequently, the affordability of new vehicles diminishes for a large segment of the expatriate and local population, leading to a noticeable contraction in the eligibility of applicants for premium financing schemes.

This reduction in purchasing power forces a shift in consumer behavior that adversely affects market volume. Potential buyers often defer their acquisition of new models or opt for lower-value used vehicles which require smaller principal amounts, effectively stagnating the expansion of the new car financing segment. According to the Central Bank of the UAE, in its report published in April 2025, the Base Rate applicable to the Overnight Deposit Facility was anchored at 4.40 percent, a level that sustained elevated costs for consumer credit throughout the fiscal period. This sustained high-cost borrowing environment limits the attractiveness of long-term automotive loans and suppresses the overall credit demand despite the underlying need for personal mobility.

Key Market Trends

The Surge in Specialized Financing Products for Pre-Owned Vehicles is gaining momentum as financial institutions adapt to the growing secondary market demand. Lenders are increasingly diversifying their portfolios by structuring tailored credit facilities that address the specific valuation and risk profiles of used automobiles, moving beyond traditional new car lending. This strategic pivot is driven by the widening inventory of quality pre-owned options which necessitates dedicated funding channels to facilitate liquidity and consumer access. According to dubizzle, January 2025, in the 'Annual Pre-Owned Non-Luxury Car Market Report 2024', the platform recorded a 14 percent increase in the number of active sellers in 2024, reflecting a deepening supply of vehicles that require specialized financing mechanisms to meet consumer uptake.

The Prevalence of Aggressive Zero-Interest and Bundled Promotional Packages has emerged as a critical tactical response to sustain credit uptake amidst elevated borrowing costs. Automotive dealerships and associated banks are synergizing to subsidize interest payments, effectively neutralizing the impact of high benchmark rates for the end consumer through subvention schemes. These promotional structures often bundle value-added services such as extended warranties to enhance the perceived value proposition and accelerate inventory turnover in a competitive climate. According to Al Masaood Automobiles, September 2025, in the 'Al Masaood Automobiles Introduces 0% Finance Campaign' announcement, the dealership rolled out exclusive zero-interest payment plans with monthly installments starting from AED 888 on select models, directly stimulating credit demand by mitigating affordability constraints.

Segmental Insights

The Banks segment is emerging as the fastest-growing category in the UAE Automotive Loan Market, primarily driven by the rapid adoption of digital lending platforms that have streamlined approval processes. Commercial banks leverage their strong liquidity to offer highly competitive interest rates and flexible repayment terms, effectively outperforming alternative lenders. Furthermore, the Central Bank of the UAE enforces robust regulatory standards that ensure financial stability, fostering high levels of borrower confidence. This combination of secure financing, digital convenience, and superior loan conditions continues to accelerate consumer demand for bank-originated automotive credit.

Regional Insights

Abu Dhabi stands as the leading region in the UAE Automotive Loan Market, primarily driven by the emirate's substantial economic wealth and high per capita income. Market analysis indicates that this financial stability fuels strong demand for luxury and premium vehicles, which command significantly higher financing values compared to mass-market segments. The region’s dominance is further reinforced by government-led sustainability initiatives that encourage the adoption of electric vehicles, stimulating demand for green auto finance. Major institutions like Abu Dhabi Commercial Bank support this growth by offering tailored credit facilities that cater to the capital’s affluent demographic and expanding corporate fleets.

Recent Developments

• In October 2024, Dubai Islamic Bank (DIB) introduced "ACCESS Auto Finance," a specialised product designed to support People of Determination with their vehicle financing needs. This new offering provided customised financing rates and repayment terms to facilitate accessible vehicle ownership. As part of the launch, the bank partnered with mobility solution providers to cover the costs of necessary vehicle adaptations and modifications. The initiative aligned with the bank's commitment to financial inclusion and social responsibility, ensuring that tailored financial products are available to underserved segments of the UAE market.
• In June 2024, Emirates NBD collaborated with CARS24, a leading e-commerce platform for pre-owned vehicles, to launch an exclusive digital auto loan journey. This partnership introduced a streamlined financing process that allows customers to receive loan pre-approvals within ten minutes directly through the platform's app or website. By digitising the application and approval workflow, the companies aimed to significantly reduce the time required to finance used cars, eliminating the need for physical branch visits. The initiative was designed to enhance customer convenience and capitalise on the growing demand in the UAE's pre-owned vehicle market.
• In May 2024, Dubizzle Cars expanded its physical presence and service offerings by launching a new hub in the Musaffah Industrial Area of Abu Dhabi. This facility was designed to revolutionise the automotive buying and selling experience by providing a comprehensive range of value-added services, including dedicated on-site options for automotive financing. The launch enabled customers to access car loans, insurance, and inspection services in a single location, facilitating smoother transactions for pre-owned vehicles. The expansion underscored the company's strategy to bridge the gap between online listings and physical automotive services.
• In March 2024, Abu Dhabi Islamic Bank (ADIB) entered into a strategic partnership with Tesla to provide competitive financing solutions for electric vehicles in the UAE. Through this collaboration, the bank integrated its financing options with the electric vehicle manufacturer's sales process, offering customers attractive profit rates starting from 1.79% under its "VOLT" program. The initiative also included complimentary home charger installation for eligible buyers, aiming to support the transition to green mobility. This partnership allowed customers to arrange their financing directly, streamlining the purchase of electric vehicles.

Key Market Players

• Emirates NBD Bank PJSC
• Abu Dhabi Islamic Bank
• Dubai Islamic Bank
• Abu Dhabi Commercial Bank (ADCB)
• Mashreqbank PSC
• National Bank of Fujairah PJSC
• United Arab Bank PJSC
• Emirates Islamic Bank PJSC
• First Abu Dhabi Bank PJSC
• National Bank of Ras Al Khaimah (P.S.C.)

By Vehicle Type	By Provider Type [Banks, NBFCs	By Percentage of Amount Sanctioned	By Tenure	By Region
Two-Wheeler Passenger Car Commercial Vehicle	Non-Banking Financial Services OEM (Original Equipment Manufacturer) Others (Fintech Companies)]	Less than 25% 25-50% 51-75% More than 75%	Less than 3 Years 3-5 Years More than 5 Years	Dubai Abu Dhabi Sharjah Rest of UAE

Report Scope:

In this report, the UAE Automotive Loan Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• UAE Automotive Loan Market, By Vehicle Type:

• Two-Wheeler
• Passenger Car
• Commercial Vehicle

• UAE Automotive Loan Market, By Provider Type [Banks, NBFCs:

• Non-Banking Financial Services
• OEM (Original Equipment Manufacturer)
• Others (Fintech Companies)]

• UAE Automotive Loan Market, By Percentage of Amount Sanctioned:

• Less than 25%
• 25-50%
• 51-75%
• More than 75%

• UAE Automotive Loan Market, By Tenure:

• Less than 3 Years
• 3-5 Years
• More than 5 Years

• UAE Automotive Loan Market, By Region:

• Dubai
• Abu Dhabi
• Sharjah
• Rest of UAE