Short, plain-English definitions of the terms you meet when borrowing in the UAE. Each entry links to the guide or tool that explains it in full, and any figure in a definition comes from our facts register with its source.
73 terms. Last updated
The Etihad Credit Bureau, often called AECB, is the UAE's credit bureau. It collects credit information directly from banks, finance companies, telecom and utility providers and other information providers under Federal Law No. 6 of 2010 on Credit Information, and turns it into credit reports and scores for individuals and companies. You do not need to register or submit anything yourself.
The annual percentage rate (APR) is the yearly cost of credit expressed as one percentage. It includes the total interest or profit payable and other fees, compounded over a year. UAE lenders must disclose it for consumer credit, which makes it the most useful single figure for comparing loans and cards, including offers quoted at a flat rate.
Arrears are payments that are overdue. Once a payment is more than 30 days past due, a lender must tell you in writing straight away. When the account is more than 60 days in arrears, it must send you and any guarantor a written notice of the amount owed, fees, consequences and who to contact, followed by monthly updates. Late payments also show on your credit report.
What happens if you can't pay your loan or credit card in the UAE
A balance transfer moves what you owe on one bank's credit card to a card from another bank. The new bank pays off the old card and books the amount as a monthly instalment plan. Each bank sets its own rate and fees for the plan, so compare its total cost, fees included, with the interest you would pay by leaving the balance where it is.
Credit card balance transfers in the UAE: how they work and what they cost
A bounced cheque is one the bank returns unpaid. Since 2 January 2022, a cheque returned for insufficient funds is a crime only in cases of bad faith, such as stopping payment without legal grounds or emptying the account. If the account holds less than the cheque amount, the bank must pay what is available. Returned cheques stay on your credit report for up to 5 years.
A business credit card is a card account in the name of a company or sole proprietorship, with cards issued to the people the business names. The card agreement sets who is liable for the balance, so read it before anyone signs. Cards for a business that are secured by the owner's or partners' salaries are treated like other credit cards under the Central Bank's card rules.
Business credit cards in the UAE: how they work and who pays
Buy now, pay later (BNPL) lets you split a purchase into instalments, usually through an app at checkout. In the UAE the Central Bank regulates it as Short-Term Credit, which must be interest-free and last no more than 12 months. One provider can lend you at most AED 20,000 or three months' verified net income at any time, whichever is lower.
How buy now, pay later works in the UAE, and the rules behind it
A cash advance is cash taken out with a credit card, for example from an ATM. Unlike card purchases, it is excluded from the rule that a statement balance paid in full by the due date is interest-free, and interest may be charged from the day you take the cash. The card's Key Facts Statement and terms show what a cash advance costs.
CBUAE is the Central Bank of the UAE, the regulator that licenses and supervises banks, finance companies and insurers in the country. For borrowers, it sets the rules on how much can be lent, which fees are capped and how lenders must treat customers, including the Consumer Protection Regulation in force since 25 December 2020.
Your rights as a borrower in the UAE: CBUAE consumer protection explained
A chargeback is the process your bank uses, through the card network, to reclaim a card payment from the merchant's bank, for example after a double charge or for goods that never arrived. You do not deal with the network yourself: you raise a disputed transaction with your bank. The Central Bank rules we checked set no chargeback steps or deadlines, so ask your bank what evidence it needs and by when.
A clearance letter is a bank's written confirmation that an account or loan is closed or fully paid and that nothing is owed on it. You may need one when you close a card, settle a loan or leave the UAE. A bank must close a credit card account within 45 calendar days of your request unless a balance is outstanding, and for a home loan the clearance letter fee is capped at AED 95.
How to cancel a credit card in the UAE and get a clearance letter
A collection agent is a firm authorised by a lender to recover overdue debts on its behalf. Lenders and their agents may contact or visit you about arrears only between 9 AM and 8 PM, may not visit your home or workplace without your express consent or a court order, and must give the institution's name and their own name when they call.
What happens if you can't pay your loan or credit card in the UAE
A company credit report is the Etihad Credit Bureau's record of a company's credit facilities and payment behaviour over the last three years. It costs AED 157.50 including VAT. The company credit score costs AED 10.50, runs from 300 to 900 and estimates how likely the company is to miss payments in the next 12 months.
AECB company credit report and score: how to get and read it
The Consumer Protection Regulation is the Central Bank rule, in force since 25 December 2020, that sets how licensed financial institutions must treat consumers. It is backed by the Consumer Protection Standards, which are equally enforceable and cover disclosure, fair treatment, responsible lending, data protection, collections and complaints. The Key Facts Statement and the cooling-off period come from these rules.
Your rights as a borrower in the UAE: CBUAE consumer protection explained
A cooling-off period is time after signing a contract during which you can withdraw without undue cost. For credit, insurance and other products regulated by the Central Bank, it is 5 complete business days. If you withdraw, fees are refunded minus reasonable direct costs disclosed in advance. You can waive the period in writing, so read carefully anything that asks you to.
Your rights as a borrower in the UAE: CBUAE consumer protection explained
A credit limit is the most you can owe on a credit card or other revolving facility at any one time. Each bank sets it under its own policy. In the UAE a bank may not raise your card limit automatically: an increase needs a new Etihad Credit Bureau check and your express consent. Card repayments must also fit within the 50% debt burden ratio.
Your credit report is the Etihad Credit Bureau's record of your borrowing. It shows the last 36 months of payment history on each active or closed credit facility and service, plus any returned cheques. A personal report costs AED 84 including VAT and includes your credit score. You can buy it through the bureau's app, or through the DubaiNow and TAMM apps with UAE PASS.
A credit score is a number the Etihad Credit Bureau calculates from your credit report to summarise how you have handled credit. Under its current model, Credit Score 3i, people with an established history get a Mature Score from 300 to 850, and people with limited history get a New-to-Credit Score from 300 to 650. A score on its own costs AED 10.50.
Data correction is the Etihad Credit Bureau service for disputing wrong information on your credit report. It is free for any report bought in the last 30 days. The bureau passes your request to the lender or provider that reported the data, and the report should be updated within 10 working days. Lenders licensed by the Central Bank must also fix errors within 7 complete business days of becoming aware of them.
The debt burden ratio (DBR) is the share of your gross monthly income that goes to repaying loans and credit cards. The Central Bank caps it at 50% of gross salary and regular income across all banks and finance companies, and at 30% for repayments that continue after retirement. Lenders must also assess whether you can afford a loan, so they can lend less than the cap allows.
Debt consolidation means replacing several debts, such as cards and personal loans, with one new loan. It can lower the monthly payment but may raise the total cost if the term is longer. Before refinancing or consolidating, a UAE lender must give you a written comparison of the total interest or profit payable if you keep your loans and if you take the new one.
Debt settlement is an agreement with a lender to clear a debt on new terms, sometimes for less than the full amount or through a repayment plan. Lenders decide case by case. A settlement should be in writing and end with a clearance letter confirming that nothing more is owed. A settled default can still stay on your credit report for up to 5 years.
Negotiating with your bank: restructuring and debt settlement
A developer payment plan is an instalment schedule in your sale and purchase agreement with a property developer, setting what you pay at booking, during construction, at handover and sometimes after it. It is a debt to the developer under the sale contract, not a bank loan: the Central Bank's mortgage rules are written for lenders. In Dubai, off-plan payments still go into the project's escrow account.
Financing off-plan property: mortgages vs developer payment plans
The DLD transfer fee is the fee Dubai Land Department charges to register a property sale. For a sale registered through Dubai Now, it lists 2% of the transaction value for the buyer and 2% for the seller, 4% in total, plus fixed fees for the title deed and map and a service partner fee. It is separate from the fee for registering a mortgage.
DLD fee, mortgage registration and the other upfront costs of buying in Dubai
The down payment is the part of the price you pay from your own money, while the loan covers the rest. For a car loan it is at least 20% of the vehicle's value, because the loan is capped at 80%. For a mortgage it depends on the loan-to-value cap, and it must come from your own resources, not from a personal loan or a credit card.
Early settlement means paying off a loan in full before the end of its term. The Central Bank caps the fee: for a personal loan at 1%, with a maximum of AED 10,000; for a home loan at 1% of the outstanding balance or AED 10,000, whichever is less; and for a car loan at 1% of the outstanding amount. Lenders may not charge future interest after an early settlement.
Early settlement of a personal loan in the UAE: fees and steps
EIBOR, the Emirates Interbank Offered Rate, is the daily reference rate for dirham lending between banks in the UAE. The Central Bank administers it, fixes it for six terms from overnight to one year, and describes it as the reference rate for loans such as mortgages, personal loans and car loans. A variable rate linked to EIBOR adds a margin, which a lender may not raise until 30 calendar days after notifying you.
In Dubai, an escrow account is a bank account opened in an off-plan project's name with an escrow agent accredited by the Land Department. The developer must pay buyers' payments, and any project finance, into it, and the money may be used only to build that project. Dubai Land Department says it is paid out only after the escrow agent's engineer confirms each construction milestone.
Financing off-plan property: mortgages vs developer payment plans
An executive document is a document that the execution court can enforce directly, as a writ of execution. Under the UAE Commercial Transactions Law, a cheque that the bank marks as unpaid for insufficient or no balance is an executive document: the holder can ask the execution court to enforce it, in whole or in part, without first filing a lawsuit to prove the debt.
A flat rate is an interest rate charged on the original loan amount for the whole term, even though you repay part of the loan every month. It therefore reads lower than the reducing rate for the same loan and the same instalments. Any lender in the UAE that advertises a flat rate must show the equivalent effective, or reducing-balance, rate next to it.
Ijara is an Islamic lease. The bank buys the asset and owns it, and you pay rent to use it for an agreed period. In home and car finance the contract usually ends with ownership passing to you, a structure often called ijara muntahia bittamleek. The rent can be fixed, or reviewed in line with a benchmark rate as set out in the contract.
The Income Utilisation Ratio is a measure on your Etihad Credit Bureau report of how much of your last reported income goes to regular payments. It adds your loan instalments, 5% of the limit of every active credit card and last month's telecom and utility dues. It is a bureau metric, separate from the Central Bank's debt burden ratio rule that lenders must apply.
An instalment deferral moves one or more loan instalments to a later date. UAE banks may defer up to two instalments in a year, at their discretion, so a deferral is something you ask for, not a right. It must not push your future salary deductions above the debt burden ratio limit. Ask the lender in writing how interest on the deferred instalments is charged.
Negotiating with your bank: restructuring and debt settlement
An interest-only mortgage is one in which you pay only the interest for a period, so the loan balance does not fall. In the UAE it is allowed only for investment property, and the principal may not be deferred for more than 5 years from the first drawdown. After that, the instalments rise because the principal has to be repaid over the remaining term.
A Key Facts Statement (KFS) is a short summary of a financial product's main terms and costs that a lender must give you before you take the product. It should be the first document in the sales process, and you sign to confirm you received it before you sign the contract. For loans it must show the expected annual rate, possible fees and how interest is calculated.
Key Facts Statement: what your bank must show you before you borrow
Left Country is a status that a lender or other information provider can report to the Etihad Credit Bureau when it believes a customer has left the UAE. It can be reported whether or not any payment is overdue, and other lenders reviewing your credit report can see it. If the status is wrong, you can dispute it through the bureau's data correction service.
Leaving the UAE with debt: what happens and what to do first
A liability letter is a bank letter stating how much you owe it; a no-liability letter states that you owe nothing. Another bank, an employer or an authority may ask for one, for example when you move a loan or close your accounts. For a credit card, either letter costs at most AED 50, and for a home loan a liability letter costs at most AED 85, both before VAT.
How to cancel a credit card in the UAE and get a clearance letter
A loan buyout is when another bank or finance company pays off your existing loan and gives you a new one in its place, usually to get a lower rate or to borrow more. The early payment fee your current lender can charge for the move is capped at 1% of the outstanding balance or AED 10,000, whichever is less, and the new loan must still meet the Central Bank limits.
Loan restructuring, which Central Bank guidance mostly calls rescheduling, changes a loan's instalment, term or both so that a borrower in difficulty can keep paying. It may not go beyond your eligibility on salary multiple, tenor and repayment percentage, and a personal loan runs past 48 months only in exceptional cases, such as retirement or lost income. The lender must confirm an agreed arrangement in writing within 10 complete business days.
Negotiating with your bank: restructuring and debt settlement
Loan-to-value (LTV) is the loan as a percentage of the value of what it buys. For mortgages, Central Bank caps depend on who is buying, the property's value and whether it is a first home: an expatriate buying a first home under AED 5 million can borrow up to 80%, and a UAE national buying a first home up to AED 5 million up to 85%. Car loans are capped at 80%.
The minimum payment is the smallest amount you must pay on a credit card by the due date to keep the account in good standing. Whatever you leave unpaid is charged interest. UAE card statements must show the minimum due, how long it would take to clear the balance by paying only the minimum, and a warning that minimum-only payments cost more and take longer.
A mortgage pre-approval, also called an approval in principle, is a bank's conditional estimate of how much it may lend you, based on your income, debts and credit record, before you choose a property. It is not a loan offer: Central Bank rules require the property to be valued on site by an independent valuer before a lender commits. How long a pre-approval lasts, and any fee, is bank policy.
Mortgage pre-approval in the UAE: what it is and how to get it
Mortgage registration is the recording of a lender's mortgage over a property with the land department, so the lender's claim is on the official record. In Dubai, the Dubai Land Department charges 0.25% of the mortgage value, plus an AED 250 title deed fee and small fixed fees, and lists a service partner fee of AED 4,000 plus VAT.
DLD fee, mortgage registration and the other upfront costs of buying in Dubai
Murabaha is an Islamic sale contract. The bank buys an asset, such as a car or goods, and sells it to you at its cost plus an agreed profit, which you pay in instalments. Because the profit is fixed in the sale price at the start, the bank earns a markup on a sale rather than interest on a loan. It is used in Islamic car and personal finance.
Musharaka is an Islamic partnership in which the bank and the customer jointly own an asset or business and share profits in agreed proportions. In diminishing musharaka, used in some home finance, the customer gradually buys the bank's share while paying rent on the part the bank still owns, until the customer owns the whole asset.
The New-to-Credit Score is the Etihad Credit Bureau score for people with limited credit history, including people who are new to the UAE. It runs from 300 to 650. It comes from a different model from the Mature Score, so the two numbers should not be compared directly. As your credit history builds, you can move on to the Mature Score.
No credit history in the UAE: how new residents build a score
A no-objection certificate (NOC) is a letter in which a lender confirms it does not object to an action, such as releasing a car from its mortgage at the traffic department or moving a home loan to another bank. Lenders may not charge for a car loan NOC to the traffic department. For a home loan, the NOC fee is capped at AED 150 before VAT.
Off-plan property is property bought before it is built or completed, usually from a developer on a payment plan. Mortgages on off-plan property are capped at 50% of the value, whatever the buyer's type or the property's price or purpose, so buyers need more of their own money than for a completed home. In Dubai, mortgages on off-plan units are registered provisionally.
Financing off-plan property: mortgages vs developer payment plans
Oqood is the Dubai Land Department register for off-plan property sales: it records a sale before the building is completed and the title deed is issued. When a buyer finances an off-plan unit, the lender's mortgage is registered provisionally through it. DLD lists a service partner fee of AED 5,000 plus VAT for these provisional registrations, on top of the mortgage registration fee.
DLD fee, mortgage registration and the other upfront costs of buying in Dubai
The payment history grid is the colour-coded record shown for each loan, card or other facility on an Etihad Credit Bureau report. It covers 24 months: green means paid on or before the due date, yellow means paid up to 90 days late, and red means paid more than 90 days late. A lender reading your report can see at a glance how regularly you pay.
A personal guarantee is a promise by a business owner, or another person, to repay a company's debt personally if the company cannot. It lets the lender look beyond the company to the guarantor's own income and assets, and the lender may check the guarantor's personal credit report. If the company defaults, the lender can pursue the guarantor for the debt.
Business loans for SMEs in the UAE: eligibility and documents
A pledged deposit is money held by a bank as security for a credit facility, usually blocked while the facility is open. Under Central Bank rules, people with an annual income below AED 60,000 can get a credit card only against a pledged deposit of at least AED 60,000, and the card limit plus any other facility must not exceed 50% of the deposit.
A profit rate is the return an Islamic bank earns on a financing, agreed at the start in place of interest. For the customer it works much like an interest rate: it sets the instalment and the total cost. It can be quoted on a flat basis, so compare offers on the APR, which UAE lenders must disclose for Islamic and conventional credit alike.
Islamic vs conventional loans: how Islamic finance works in the UAE
A reducing rate is an interest rate charged only on the balance you still owe, so the interest part of each instalment falls as you repay. It is also called the effective or reducing-balance rate. Under Central Bank rules, interest on loans is calculated on the reducing balance, and a lender that quotes a flat rate must show the reducing equivalent next to it.
A Restricted Licence Finance Company is a finance company licensed by the Central Bank of the UAE for a limited set of activities rather than general lending. Short-Term Credit, the regulator's term for buy now, pay later, may be offered by these companies or by agents that partner with a licensed finance company or bank. Offering it without a licence can be penalised.
How buy now, pay later works in the UAE, and the rules behind it
A salary transfer is an arrangement in which your employer pays your salary into an account at the bank that lends to you, often confirmed by a letter from the employer. Many loans and cards are offered either with or without a salary transfer, on different conditions, such as the rate, the amount and the documents needed, that each lender sets for itself.
Sanadak is the UAE's independent ombudsman unit for complaints from consumers and SMEs against banks, finance companies and insurers licensed by the Central Bank. It was set up by a Central Bank regulation effective 15 March 2023. You normally complain to the institution first. Filing a complaint with Sanadak is free; an appeal against its decision costs AED 500, refunded if you win.
How to complain about a bank in the UAE, and when to go to Sanadak
A security cheque is a post-dated cheque that a lender holds as security for loan repayments. Central Bank rules allow lenders to take only post-dated cheques that cover the instalments, worth no more than 120% of the loan or debit balance, and they ban signed blank cheques. A security cheque that is presented and returned unpaid for lack of funds can be enforced through the courts.
A Shariah board is the committee of Islamic scholars at an Islamic bank or Islamic window that reviews and approves its products and contracts. In the UAE, the Higher Shari'ah Authority also issues resolutions that apply across Islamic finance; for example, its resolution No. 76/3/2019 limits early settlement fees on Islamic financing to the actual costs the settlement causes.
Islamic vs conventional loans: how Islamic finance works in the UAE
Short-Term Credit is the Central Bank's term for buy now, pay later: credit for up to 12 months to buy specific goods or services, with no interest, no lien on collateral and no security deposit. Restricted-licence providers and their agents may not charge interest on it, and all fees, including late fees, are capped at 30% of the original amount.
How buy now, pay later works in the UAE, and the rules behind it
An SME is a small or medium-sized enterprise. The UAE has an official definition that classifies businesses by sector, number of employees and annual turnover, and banks also use their own size bands to decide which products and criteria apply. An SME can take a complaint against a licensed bank or finance company to Sanadak free of charge.
Business loans for SMEs in the UAE: eligibility and documents
A stress test checks whether you could still afford a loan if its rate went up. When working out the debt burden ratio for a mortgage, UAE lenders must test the repayments at 2 to 4 percentage points above the current rate, or above the rate that applies after any introductory period, and the result must still fit within the 50% cap. The lender must give you a written summary.
Tawarruq is an Islamic structure used to provide cash. The bank sells you a commodity, such as a metal, on deferred payment at its cost plus a profit, and the commodity is then sold on the market for cash on your behalf. You receive the cash and repay the deferred price in instalments. Islamic personal finance is often structured this way.
Islamic vs conventional loans: how Islamic finance works in the UAE
The tenor is the length of time over which a loan is repaid. A longer tenor lowers each instalment but usually increases the total interest. Central Bank rules cap it: a personal loan can run for at most 48 months, a car loan for 60 months and a mortgage for 25 years. Lenders may not stretch a tenor to get around the debt burden ratio.
A top-up loan is extra borrowing added to an existing loan, often by increasing the balance and restarting the term. Under Central Bank rules, a top-up should not be granted unless the original loan has been repaid without default for at least one year, and a lender may not close a loan only to open a larger one with a longer tenor to get around the debt burden ratio.
Personal loan top-ups in the UAE: how they work and what they cost
Trade finance covers bank products that fund or secure the buying and selling of goods, especially across borders. Common forms include letters of credit, in which a bank promises to pay a seller once agreed documents are presented, bank guarantees, and invoice financing, in which a lender advances money against invoices that customers have not yet paid.
Business loans for SMEs in the UAE: eligibility and documents
A trade licence is the licence a UAE business needs to operate, issued by the economic department of an emirate or by a free zone authority. It names the company, its partners or managers and its permitted activities. Lenders ask for a valid trade licence when a business applies for finance, and often for a minimum period of trading as well.
Business loans for SMEs in the UAE: eligibility and documents
A travel ban is an order that stops a person leaving the UAE, for example while a legal case is pending. According to the Abu Dhabi Judicial Department, a ban obtained over a debt lapses if the creditor does not show the judge a filed claim within 8 days, or does not start enforcing the final judgment within 30 days. The UAE Government portal advises checking for a ban before you travel.
Travel bans for debt in the UAE: how they work and how to check
Ujrah is a fee charged for a service under Islamic finance, in place of interest. Some Islamic credit cards charge a fixed monthly ujrah, or service fee, instead of interest on the outstanding balance; the amount and when it applies are set out in the card's terms. To compare such a card with a conventional one, look at the APR.
An unauthorised transaction is a payment made without your explicit authentication or authorisation; under Central Bank rules the term also covers a payment that was executed incorrectly. Your bank must give you at least 30 business days to report one, and must refund it when its investigation ends or within 30 calendar days of the report, whichever is sooner, unless you acted fraudulently or with gross negligence.
A variable rate is an interest or profit rate that can change during the term of a loan. Where it is built from a base or benchmark rate, such as EIBOR, plus a margin, the lender must show the two parts separately, explain the base rate and say how often the rate may be revised. It may not raise the margin until 30 calendar days after telling you.
A vehicle mortgage, often called a lien, is the lender's security over a car bought with a loan, recorded against the car until the loan is repaid. In Dubai, RTA says the mortgage is added to the vehicle record electronically, shown on the vehicle documents, including the Vehicle Licence, and redeemed at the bank. Lenders may not charge for a car loan NOC to the traffic department.
Working capital finance is short-term credit that pays for a business's day-to-day costs, such as stock, salaries and rent, while it waits to be paid by its customers. It often takes the form of a revolving credit line or an overdraft that the business draws and repays as needed, with interest or profit charged on the amount used.
Business loans for SMEs in the UAE: eligibility and documents