Personal loan calculator Bahrain: EMI and APR

What CBB's rules for personal loans say

• No maximum rate: CBB sets no ceiling on the interest rate — the rate in your offer is what counts.
• Effective rate only: Banks must not charge interest using a monthly flat rate: they must use an effective rate on the reducing balance (since October 2019).
• Longest term: Instalment consumer finance (personal and car loans) runs at most 7 years, restructuring included; the term may be extended at most twice.
• Processing fee: Processing fees on a consumer loan: at most BHD 100 in total; no fee on a top-up. Bank fees carry 10% VAT — arrangement and processing fees and other bank charges such as early-termination (early-settlement) and late-payment fees; the interest (or Islamic profit) itself is VAT-exempt.
• Changes: A bank must tell you at least 30 calendar days before it raises a rate, fee or charge, so you can accept or settle the loan.
• Paying off early: Paying off a consumer loan early, fully or partly: at most 1% of the outstanding amount or BHD 100, whichever is lower (plus 10% VAT on the fee). See the early settlement calculator.
• Comparing offers: Banks publish their APR on standard examples: BHD 10,000 over 7 years for consumer finance and BHD 100,000 over 25 years for housing finance. The APR incl. fees (CBB method) is the yearly rate at which your payments repay what you actually receive — the loan minus the fees and their VAT — compounded over the year as in CBB's APR formula, so it can be compared with the APR a bank must show.

Islamic banking

The same CBB limits apply to Islamic banks: 50% of gross income, 7 years, the BHD 100 processing-fee cap and the early-settlement cap. The charge is called profit instead of interest — the maths is the same. One rule differs: on early repayment an Islamic bank may take at most one month's profit (that of the month in which you repay). A card balance: credit card minimum payment.

CBB's 50% rule in one minute

• The limit: all your monthly repayments on consumer finance — personal loans, car loans, credit cards, overdrafts — at most 50% of your monthly gross income (before deductions). Only regular income counts; a spouse's income only on a joint loan.
• Cards: each credit card counts at 5% of its limit, whether you use it or not — a BHD 2,000 limit uses BHD 100.000 of your monthly room.
• Your home loan is separate: A loan secured by a first charge on the home you live in (or will live in) is not "consumer finance": its instalment is outside the 50% consumer-finance limit. Banks must still look at housing costs in their own review.
• Above BHD 3,000 a month: For people earning more than BHD 3,000 a month the 50% limit may be relaxed after the bank's review — a higher figure is not a right.
• The same for everyone: CBB's rule makes no difference between Bahrainis and expatriates, or salaried and retired borrowers. The bank must still review your finances in detail and may keep repayments well below 50%; housing costs get particular attention, and what is left must support you and your dependants.

Financing companies

Besides banks, CBB licenses financing companies. CBB-licensed financing companies follow Volume 5 of the Rulebook. Their fee table (Appendix BC-2, from 1 May 2018) caps early or part settlement like the banks' — the lower of 1% or BHD 100 on a consumer loan, of 0.75% or BHD 200 on a home loan — and an instalment postponement you ask for at BHD 10, but it sets no cap on processing fees: ask the company for its fees in writing. On Sharia-compliant financing they follow the same rule as Islamic banks: on early repayment the profit is limited to one month's profit. A loan from a financing company still counts in a bank's 50% check.