Personal loan calculator: flat rate vs reducing rate
A flat rate charges interest on the full loan for the whole term, so the equivalent reducing-balance rate is close to double. UAE banks advertising a flat rate must show the effective rate next to it. Personal loans are capped at 20 times monthly salary and 48 months.
Monthly paymentAED 2,375
- Equivalent reducing rate a year
- 6.58%
- Total interest
- AED 14,000
- Total repaid
- AED 114,000
- Legal maximum for your salary
- AED 300,000
The rules this calculator uses
- A personal loan can be at most 20 times the borrower's monthly salary or total income. The same limit applies to nationals and expats.Confirmed in the official text: CBUAE Regulation No. 29/2011, Article 2(b) (Personal Loan)
- A personal loan can run for at most 48 months. The same limit applies to nationals and expats, except for loans the Central Bank exempts.Confirmed in the official text: CBUAE Regulation No. 29/2011; CBUAE Regulations for UAE Nationals (N 13/1187/2013), Article 2(c)
- Interest on personal loans, car loans, overdrafts and card balances must be calculated on the reducing balance, on an annual basis (365-day year), and advertised that way.Confirmed in the official text: CBUAE Regulation No. 29/2011, Article 6(a)-(b)
- A bank that advertises a flat rate must show the equivalent effective (reducing-balance) rate next to it. Banks must also give the expected APR, including all fees, for comparison.Confirmed in the official text: CBUAE Clarifications and Guidelines Manual for Regulation 29/2011; CBUAE Consumer Protection Standards (Circular 8/2020), Manual guidance on Article 6; Standards s.2.1.3.2 and s.2.3.1.13
- The fee for settling a personal (consumer) loan early, or partly, is at most 1% of the outstanding balance, capped at AED 10,000, whichever is less.Confirmed in the official text: CBUAE Regulation No. 29/2011, Article 20(b); Appendix No. 2 (Consumer Loans)
Results are estimates for comparison. Banks and employers may apply further conditions of their own.