How to use the calculator
- Enter the car's value and your down payment. The loan is the difference.
- Enter the rate from the lender's quote and choose whether it is flat or reducing, then the term in months.
- Optionally, add your gross monthly income and existing repayments to check the instalment against the debt burden ratio cap.
How the instalment is worked out
Flat rate
Interest = loan × annual rate × months ÷ 12
Instalment = (loan + interest) ÷ months
Reducing rate
Instalment = P × i ÷ (1 − (1 + i)−n)
P is the loan, i the annual rate divided by 12 and n the number of months. For a flat quote the calculator also shows the reducing rate that gives the same instalment, which is the figure to compare offers on.
Flat rates and the effective rate
Effective rate shown
Any bank advertising a flat interest rate must show the equivalent effective (reducing-balance) rate next to it.
- Applies to
- Banks and finance companies licensed by the CBUAE (conventional and Islamic), lending to individuals
- Source
- CBUAE Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers, Article (6) Interest, Central Bank of the UAE
- Checked
The Central Bank limits
The calculator checks three rules. If your figures break one, it shows the limit and what would bring you within it.
Largest car loan
80%
A car loan must not exceed 80% of the value of the financed vehicle, so the buyer funds at least 20% themselves.
- Applies to
- Banks and finance companies licensed by the CBUAE (conventional and Islamic), lending to individuals; private cars
- Source
- CBUAE Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers, Article (3) Car Loan, Central Bank of the UAE
- Checked
The rule caps the loan at 80% of the value of the car but does not say whether that is the agreed price or a valuation, so enter the value your lender accepts. If the loan is above the cap, the calculator shows the most a lender can lend and the smallest down payment that goes with it.
Longest car loan term
60 months
The maximum repayment period of a car loan is 60 months.
- Applies to
- Banks and finance companies licensed by the CBUAE (conventional and Islamic), lending to individuals; private cars
- Source
- CBUAE Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers, Article (3) Car Loan, Central Bank of the UAE
- Checked
Maximum debt burden ratio
50%
Monthly deductions for all loans and facilities from banks and finance companies together, including car loans, home loans, overdrafts and credit cards, must not exceed 50% of the borrower's gross salary and any regular income from a defined and specific source, at any time.
- Applies to
- Banks and finance companies licensed by the CBUAE (conventional and Islamic), lending to individuals
- Source
- CBUAE Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers, Article (7) Repayment Installments, Central Bank of the UAE
- Checked
Worked example
Worked example
AED 100,000 car with a 20% down payment over 60 months
The value and the 5% rate are illustrations, not market figures.
- Down payment: 20% × AED 100,000 = AED 20,000, so the loan is AED 80,000, exactly the 80% cap.
- At 5% flat: interest = AED 80,000 × 5% × 60 ÷ 12 = AED 20,000; instalment = AED 100,000 ÷ 60 = AED 1,666.67.
- That flat rate costs the same as 9.15% reducing.
- At 5% reducing, the instalment would be AED 1,509.70 and the interest AED 10,581.92.
At 5% flat this car costs AED 120,000.00 in all, AED 9,418.08 more than at 5% reducing.
What the result leaves out
- Fees and insurance. Processing fees, car insurance and any credit life cover are not included. The APR in the lender's Key Facts Statement includes fees.
- Lender policy. Each lender sets its own rules on the car's age, the minimum salary and the documents it needs.
- Days in the month. Banks count interest on actual days, so their instalment can differ a little.
- Charges later on. Paying off early and paying late have their own Central Bank caps. A lender may not charge for the no-objection certificate it sends to the traffic department.
Early settlement of a car loan
1% of outstanding
The early settlement fee on a car loan is capped at 1% of the outstanding amount.
- Applies to
- Banks and finance companies licensed by the CBUAE (conventional and Islamic), lending to individuals; car loans
- Source
- CBUAE Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers, Appendix No. (2): Maximum Limits for Fees and Commissions, Central Bank of the UAE
- Checked
Note
The rules on down payments and eligibility are in car loan down payment and eligibility, and financing a second-hand car in used car loans. To see what settling early would cost and save, use the early settlement calculator.