0% car finance or cash discount? (UAE)
Updated
Is 0% car finance really free?
Only if the 0% price is the same as the cash price. Give up a 10% cash discount on a AED 100,000 car to pay 0% over 48 months with 20% down, and you pay the same as a loan at 6.70% a year on the reducing balance — the lost discount is the interest. Ask the dealer for the cash price in writing before you choose.
| Cash discount given up | 36 months | 48 months | 60 months |
|---|---|---|---|
| 0% | 0.00% | 0.00% | 0.00% |
| 5% | 4.24% | 3.20% | 2.57% |
| 10% | 8.88% | 6.70% | 5.38% |
| 15% | 14.02% | 10.58% | 8.49% |
Official rule: Banks must calculate interest on the reducing balance, using a 365-day year. (source, checked 2026-10-19)
"0% for 5 years" or "AED 8,000 off for cash"? If you give up a discount to get 0%, the discount is the interest. This shows how much.
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- Total with the 0% offer
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- Bank loan on the cash price: monthly
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- Bank loan: total incl. down payment
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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.
How the hidden rate is found
With 0% finance you repay the full offer price in equal instalments. Paying cash would have cost less. The calculator finds the yearly rate at which borrowing only the cash price would give exactly the same instalments — that is what the "0%" really costs. If the offer price equals the cash price, the offer really is free.
Questions people ask
Is it possible to get 0% finance on a car?
Yes — in the UAE, dealers and banks do advertise 0% car finance. The cost is then usually paid another way — a higher price than for cash, a cash discount you give up, or fees and insurance in the contract. Get the cash price in writing and compare; the table above shows the real rate behind a lost discount.