Personal loan fees and APR: the full cost of borrowing

The full cost of a UAE personal loan is the interest plus every fee you pay over the term. The Annual Percentage Rate (APR) in the Key Facts Statement sums this up as one yearly figure. Compare APRs and the total you will repay, not headline rates or instalments, because a lower rate with higher fees can cost more.

Key takeaways

• The APR turns the rate and fees into one yearly figure, so it is the number to compare across offers.
• The early settlement fee is capped at 1% of the balance or AED 10,000, whichever is less, before VAT.
• The Central Bank fee table lists no processing fee for personal loans, so check each lender’s Key Facts Statement.
• A lower rate can still cost more once an upfront fee is added, as the worked example shows.

What the full cost of a personal loan includes

The price of a loan is more than its interest rate. Over the whole term you pay the interest, any fee the lender charges to arrange or run the loan, and any charge that arises if you pay late or leave early. Add those together and subtract the amount you borrowed, and you have the real cost of borrowing.

The instalment alone does not show this. A longer term lowers the instalment but usually adds interest, and a fee paid upfront never appears in the monthly figure. The two numbers worth finding on any offer are the total amount you will repay and the APR.

Interest rate versus APR

The interest rate is the price of the money itself. The Annual Percentage Rate (APR) expresses the cost of the loan as a single yearly percentage, so offers with different fees and terms can be set side by side. A lender must show the APR and the fees in the Key Facts Statement it gives you before you sign the contract.

Two quotes need care. A flat rate is charged on the original loan for the whole term, while a reducing rate is charged only on what you still owe, so the same number means very different costs. Our guide to flat and reducing rates works the same loan both ways and shows the conversion. Whichever way a rate is quoted, the APR in the statement is the figure to compare.

The fees you may meet

The Central Bank sets maximum limits for several fees on consumer loans in a fee table. It is a ceiling, not a price list: a lender can charge less, and the fees below are quoted before VAT.

Early settlement fee on a personal loan

1% or AED 10,000

The fee for settling a consumer loan early is capped at 1% of the outstanding balance, with a maximum of AED 10,000, before VAT. A lender may charge less.

Source: Regulation 29/2011, Appendix 2, Central Bank of the UAE, checked 13 Oct 2026. VAT at 5% is added to a fee, so the highest early settlement charge is AED 10,500.

Do not assume a fee is absent because a table is silent. The lender’s own Key Facts Statement is the document that lists what applies to your loan.

A worked example: two offers compared

A lower rate does not always mean a cheaper loan. The next example puts a plain offer against one with a fee.

Worked example

AED 100,000 over 36 months, two offers

The rates and the fee are illustrations, not market prices. Both offers are on a reducing balance, and figures are rounded to the nearest dirham.

1. Offer A: 8% a year, no processing fee. The monthly rate is about 0.667%, so the instalment is about AED 3,134. Over 36 months you repay about AED 112,811, which is about AED 12,811 of interest.
2. Offer B: 7% a year with a processing fee of 2% (AED 2,000). The instalment is about AED 3,088. Over 36 months you repay about AED 111,158, which is about AED 11,158 of interest.
3. Add the fee to offer B: AED 11,158 + AED 2,000 = about AED 13,158 of total cost.
4. Difference: AED 13,158 − AED 12,811 = about AED 347 more for offer B.

In this illustration offer B has the lower rate but costs about AED 347 more over the full term.

The result depends on the fee and the term. Change the fee to 1% and offer B would come out cheaper, which is why neither the rate nor the fee can be judged alone. The fee is also paid at the start, so if you settle or move the loan early the interest saved is smaller while the fee stays. That is why the APR matters: it folds the fee into one yearly figure. Use the loan payment calculator below to rerun this with your own numbers.

How to compare offers

1. Ask for the Key Facts Statement for each offer. It sets out the APR, the fees and the total you will repay in a standard layout.
2. Compare like with like. Use the same amount and the same term. Convert any flat quote first, as explained in flat vs reducing rate.
3. Add up every fee. Include processing, insurance if it applies and the early settlement terms, then compare the total repayable amount.
4. Check what the price depends on. Some lenders price loans differently with a salary transfer, as covered in personal loans without salary transfer.
5. Check you fit the limits. Whatever the price, the loan must sit within the 20 times salary, 48 month and 50% repayment limits; see how much personal loan you can get and eligibility.

Fees when you leave or add to a loan

The cost of a loan does not stop at signing. Three common moves each carry their own charges:

• Settling early stops future interest but can attract the capped early settlement fee. See early settlement of a personal loan.
• Moving to another bank triggers the same cap on the old loan, plus whatever the new lender charges. See personal loan buyouts.
• Topping up adds borrowing to an existing loan, and the lender may list its own fees for it. See personal loan top-ups.

Your protections before you sign

The lender must give you the Key Facts Statement before the contract. After signing, you have a cooling-off period of 5 complete business days to withdraw without undue cost. Read more in your rights as a borrower.

More on pricing and limits is in the personal loan guides, and on how we research and fund our guides on our About page.