Car loan or cash?
Type the car price, your down payment and the loan offer. See the monthly payment, the real yearly rate behind a "flat" rate, and what each option really costs once fees, insurance, resale value and the interest your cash could earn are counted.
From the lender's Key Facts Statement. 5% VAT is added on top. Example: 1% of the loan.
Lenders require comprehensive cover on a financed car. Example: 2.5% of the car's value; cars that lose value cost less to insure each year.
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Paying the loan off early
What to know before you sign
A flat rate charges interest on the whole loan for the whole term, even though you pay part of it back every month. So a 3% flat rate over five years costs about as much as a 5.6% reducing-balance rate. Central Bank rules make lenders work out interest on the reducing balance and show the equivalent rate next to any flat rate: ask for it.
A car loan can be at most 80% of the car's value, so you need at least 20% down, and at most 60 months to repay. Some lenders allow less for used cars. All your loan payments together must stay within 50% of your salary.
The car is mortgaged to the lender until the loan is paid, and lenders require comprehensive insurance for it. When you finish, ask for a clearance letter to remove the mortgage from the registration.
Cash you put into a car stops earning. If your savings earn more a year than the loan's true rate, borrowing can cost less, as long as you would really keep the money invested and not spend it.
- Flat vs reducing loan calculator
- Monthly cost of running a car
- What your car will be worth
- Plan to pay off several debts
Sources, last checked: 27 October 2026. Central Bank of the UAE (CBUAE), Regulations Regarding Bank Loans and Other Services Offered to Individual Customers (Circular 29/2011, as amended), on the CBUAE rulebook: Article 3 (car loans: at most 80% of the vehicle's value, at most 60 months, secured by a mortgage on the car); Article 6 (interest worked out on the reducing balance, and the equivalent reducing rate shown with any flat rate); Article 7 (all payments within 50% of salary); Article 20(b) as replaced by Resolution 26/3/2018 (early payment fee when moving a loan at most 1% of the outstanding balance or AED 10,000, whichever is less) and Appendix 2 (car loan early settlement fee: 1% of the outstanding balance; fees exclude VAT). A UAE lender's auto loan Key Facts Statement (April 2026): processing fee 1% of the loan (minimum AED 500, maximum AED 2,500), early settlement 1% of the remaining principal capped at AED 10,000, plus VAT; 60 months for new and 48 months for used cars. A UAE lender's car loan FAQ: comprehensive insurance of at least the loan amount is required. Insurance example: the Unified Motor Insurance Rates (comprehensive for saloon cars at most 5% of value), as cited in our car cost calculator. Resale example: 18% lost in the first year and about 13% a year after, from the ranges in our car value calculator (UAE depreciation guides: 15–20% in year one, 10–15% a year after). The Central Bank does not set one cap on processing fees for car loans that we could confirm: check with the authority and your offer. Formulas: flat interest = loan × rate × years; payment = (loan + interest) ÷ months; reducing payment = standard amortisation at the yearly rate ÷ 12; equivalent rates and the break-even savings rate are found numerically; "real cost" discounts every payment to today at your savings rate, monthly. Not financial advice.