UAE Loan Calculator – Flat vs Reducing Rate EMI
Banks in the Gulf often quote personal and car loans at a flat rate, which looks about half the real cost. Enter the amount, rate and term to see the monthly instalment, the equivalent reducing rate, the total interest and a month-by-month schedule.
UAE · Saudi Arabia · All GCC · Free · No sign-up · Runs in your browser · Estimate, not legal or financial advice
With a flat rate, interest is charged on the original amount for the whole term, even though you repay part of it every month. With a reducing (diminishing) rate, interest is charged only on what you still owe. A 5% flat rate over 5 years costs the same as about 9.15% reducing.
Compare offers on the reducing rate (or APR) and also add processing fees, insurance and early-settlement charges. The UAE Central Bank requires banks to disclose costs clearly; ask the bank for the reducing-rate equivalent if it is not shown.
The reducing-balance instalment is EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan, r the monthly rate (annual ÷ 12) and n the number of months. A flat-rate instalment is (P + P × flat rate × years) ÷ n. Islamic finance (murabaha / ijara) quotes a profit rate but the maths of the instalment is the same.
Rules were checked against these sources in October 2026. Laws change — if a source says something different, the source is right.
How do I convert a flat rate to a reducing rate?
Enter the flat rate and the term — the calculator finds the reducing rate that gives the same monthly payment. Roughly, the reducing rate is 1.8–1.9 times the flat rate for 3–5 year loans.
Which is cheaper, flat or reducing?
At the same headline number a reducing rate is always cheaper. Compare offers by their reducing rate or APR, not the flat rate.
Can I download the schedule?
Yes — CSV, Excel (XLSX) or PDF. The file is created in your browser.