Car Loans and Home Loans (Mortgages)

Car and home loans are popular financing options in Saudi Arabia, enabling individuals to purchase vehicles and properties with manageable repayment terms. Both conventional and Shariah-compliant options are available, with Islamic formats widely preferred due to the country’s emphasis on Islamic finance principles.

How to Apply for Auto Financing and Home Loans

Applying for car loans and mortgages in Saudi Arabia involves meeting eligibility criteria and submitting specific documents. Each loan type has unique requirements based on the nature of the purchase and the bank’s guidelines.

Eligibility for Car Loans

To qualify for a car loan, applicants generally need to provide:

• Proof of Income to verify stable earnings

• Iqama for expatriates, serving as residency proof

• Vehicle Details about the car they intend to finance

Some banks collaborate with car dealerships, offering competitive rates and tailored financing for specific brands and models, often with exclusive offers or discounts for bank customers.

Eligibility for Home Loans (Mortgages)

Home loan applicants need to meet more stringent requirements, including:

• Proof of Residency

• Income Verification

• Down Payment

Mortgages typically come with fixed or variable interest rates and can have repayment terms of up to 25 years. Due to the long-term commitment, banks often conduct thorough background and credit checks to assess the applicant's repayment ability.

Documents Needed

Common documents required for car or home loans include:

• Proof of Residency such as an Iqama for expatriates

• Salary Certificate to confirm income

• Employment Verification

For mortgages, additional property-related documents may be needed, such as proof of down payment and a formal property purchase agreement.

Key Loan Providers and Interest Rates

Auto Financing Providers

• Saudi National Bank (SNB) SNB offers competitive auto loans with flexible repayment options. Their Shariah-compliant car loans, based on Murabaha, allow customers to finance vehicles ethically and transparently.

• Al Rajhi Bank Known for its focus on Islamic finance, Al Rajhi provides fixed-rate car financing options that follow Shariah guidelines and offer repayment stability without interest.

• SAB SAB partners with multiple car dealerships to offer competitive car financing rates, with both conventional and Islamic options to suit different preferences.

Home Loan Providers

• Saudi National Bank (SNB) SNB offers conventional and Islamic mortgage options with flexible repayment plans and competitive interest rates, serving both Saudis and expatriates investing in property in the Kingdom.

• Al Rajhi Bank A leader in Shariah-compliant financing, Al Rajhi offers Ijara (leasing) and Murabaha-based home loans, allowing customers to choose a model aligned with Islamic finance principles.

• Riyad Bank Riyad Bank provides flexible mortgage terms for Saudi nationals and expatriates interested in homeownership in Saudi Arabia.

Interest Rates and Shariah Compliance

• Conventional Mortgages Conventional home loans typically offer fixed or variable interest rates and are available to both Saudi nationals and expatriates. With terms up to 25 years, these loans provide long-term stability, though interest-based repayments may not align with Shariah principles.

• Islamic Mortgages Shariah-compliant home financing options, such as Ijara and Murabaha, offer profit rates instead of traditional interest

  • Ijara The bank leases the property to the customer, who makes payments over time. Eventually, the customer gains ownership of the property.

  • Murabaha The bank purchases the property and sells it to the customer at a profit. The customer repays this amount over time.

Understanding the differences between conventional and Islamic financing allows customers to make informed choices aligned with their financial goals and ethical values. Saudi banks offer flexible repayment options and a variety of providers to support responsible and sustainable purchasing.