How car finance works in the UAE, explained simply

Car finance in the UAE is simpler than people expect, but the numbers are quoted in a way that confuses buyers. Here is the plain version.

The three numbers that matter

• Deposit, usually 20 percent of the car value as a minimum
• Tenure, typically 12 to 60 months
• Rate, quoted as either a flat rate or a reducing rate

A flat rate is calculated on the full loan amount for the whole term. A reducing rate is calculated on what you still owe. A 3 percent flat rate is roughly a 5.5 to 6 percent reducing rate, so always compare like with like.

What the bank will ask for

• Emirates ID and passport with visa page
• Salary certificate or trade licence if self employed
• Three to six months of bank statements
• A minimum salary, commonly AED 5,000 to 8,000 depending on the bank

Early settlement

You can settle early, but most banks charge a fee of around 1 percent of the outstanding amount. Factor that in if you plan to change cars in two years.