Flat rate to real rate converter (UAE)
Updated
Is 3.99% flat really cheap?
Not as cheap as it sounds: 3.99% flat over 48 months is 7.46% a year on what you actually still owe (over 36 months: 7.49%). The common “× 1.8” shortcut gives 7.18%, the low end of the usual 1.8–1.9 range, so it slightly understates the real cost. Banks must show this reducing rate next to any flat rate they advertise, so compare offers on that number plus the fees.
| Advertised | 36 months | 48 months |
|---|---|---|
| 2.49% flat | 4.74% | 4.73% |
| 2.99% flat | 5.66% | 5.65% |
| 3.49% flat | 6.58% | 6.56% |
| 3.99% flat | 7.49% | 7.46% |
| 4.00% flat | 7.51% | 7.47% |
| 4.49% flat | 8.40% | 8.34% |
| 4.99% flat | 9.29% | 9.22% |
| 5.00% flat | 9.31% | 9.24% |
In the UAE, a 4% flat rate over 48 months is 7.47% a year on the reducing balance — the “× 1.8” rule gives 7.2%. A 5% flat rate over 36 months is 9.31% (the rule gives 9.0%). 48 months is the longest a UAE personal loan may run.
Official rule: A bank advertising a flat rate must show the equivalent effective (reducing) rate next to it. (source, checked 2026-10-19)
A bank quotes 3.49% flat over 48 months. Measured on what you actually still owe, that is 6.56% a year.
3.49% flat over 48 months costs the same as 6.56% a year on what you actually owe.
- As a flat rate
- 3.49%
- Total interest
- AED 13,960
- Everything you repay
- AED 113,960
Not a valid document. Estimate for information only — not financial advice, not an offer of credit and not a bank document. Errors are possible. Only your bank's or finance company's official offer letter, contract and statements are binding.
Your exact schedule — calculated like your bank
Banks count interest day by day on a 365-day year, from the day the loan is paid out. Enter your dates to get the same instalment and schedule as your bank — and see what skipping an instalment really costs.
Tick "Skip" next to any instalment to see what deferring it costs. UAE banks may allow up to two a year.
- Total interest
- –
- Everything you repay (incl. skip fees)
- –
Payment schedule
| # | Due date | Days | Instalment | Interest | Principal | Balance after | Skip |
|---|
Why the two numbers are so different
A flat rate charges interest on the full amount you borrowed for the whole term, even though you pay part of it back every month. A reducing rate only charges interest on what you still owe. The same number therefore means a much more expensive loan when it is flat.
What the Central Bank requires
Banks in the UAE must calculate interest on the reducing balance, and any bank that advertises a flat rate has to state the equivalent effective rate next to it. Compare loans only on the reducing (effective) rate, and include the fees. More in flat vs reducing rate explained.
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Questions people ask
What is a good flat rate for a personal loan in the UAE?
In the UAE, there is no official benchmark, so judge any offer by its real rate: 2.49% to 4.99% flat over 48 months equals 4.73% to 9.22% a year on the reducing balance. Compare offers on that rate with the processing fee included (the APR in the Key Facts Statement), not on the flat number.
Is a flat rate the same as an interest rate?
No — in the UAE, a flat rate charges interest on the original amount for the whole term. The real (reducing) rate charges only on what you still owe, so for 2–5 year loans at flat rates between 2.5% and 5% the real rate is about 1.8 to 1.9 times the flat rate.
Which rate should I use to compare loans?
The reducing (effective) rate, plus all fees. UAE banks must show it next to any flat rate they advertise.
Why does my bank's figure differ?
Banks count interest day by day on a 365-day year, starting on the day the loan is paid out. With monthly steps the difference is usually a few dirhams a month — but if your first instalment comes much sooner or later than one month after payout, it can be tens of dirhams a month. Enter your payout and first due dates in the exact schedule to match your bank.
What does skipping (deferring) an instalment cost?
When a UAE bank lets you skip an instalment, interest keeps running on what you owe, so the loan gets more expensive and usually runs longer. Tick Skip in the exact schedule to see the cost, and add your bank's fee.
Does this apply to Islamic finance?
Yes — in the UAE, Islamic banks quote a profit rate instead of interest, but the maths and the disclosure rules work the same way.