Last Updated on July 4, 2025
When it comes to personal loan interest in UAE, there is no fixed rate applicable to all borrowers. Each bank in the UAE sets its own interest rates, requirements, and loan recovery methods.
This means that the personal loan interest rate Dubai residents pay may differ significantly from what borrowers in Abu Dhabi or Sharjah pay, depending on the lender.
Even within the same bank, various personal loan products come with different interest rates. For example, banks offer:
- Personal loans for travel
- Personal loans for debt settlement
- Personal loans for home renovation
- Personal loans for education
Each of these personal loan categories has a different interest structure. Whether or not this seems fair, it’s the standard practice across UAE banks. They treat each loan product as a separate offering under the broader personal finance umbrella.
Do UAE Nationals Get Better Interest Rates?
Yes, the personal loan interest in UAE varies not only by product type and bank but also by nationality.
UAE nationals enjoy subsidized interest rates on both personal and business loans. In contrast, expatriates pay higher personal loan interest rate Dubai and across other emirates.
Additionally, loan eligibility limits differ. For instance:
- A UAE national can qualify for up to AED 5 million
- An expat with a similar salary might only be eligible for up to AED 2 million
This shows a clear distinction in how banks treat nationals versus expatriates regarding borrowing capacity and cost of credit.
How is Personal Loan Interest Calculated in Dubai?
Banks in the UAE typically offer two types of interest calculations:
1. Flat Rate Interest
This means the interest amount remains the same throughout the loan term, regardless of how much principal has been repaid.
Example Calculation:
- Loan Amount: AED 20,000
- Interest: 5% flat annually
- Tenure: 1 year
- Monthly Principal: AED 20,000 / 12 = AED 1,666.67
- Monthly Interest: AED 83.34
- Monthly Installment = AED 1,750.01
You pay the same amount each month until the loan is fully repaid.
2. Reducing Interest Rate
This method calculates interest on the remaining principal, meaning your monthly payments reduce over time. This is more borrower-friendly but is usually advertised at higher rates.
Looking for the Lowest Interest Rate for Personal Loan in UAE?
Here’s a comparison of banks offering competitive personal loan interest in UAE, particularly for expatriates:
| Bank | Minimum Salary | Interest Rate (Flat) | Monthly Payment | Salary Transfer Required? |
|---|---|---|---|---|
| CBD Absher | AED 8,000 | 2.45% | AED 2,189 | Yes |
| Emirates Islamic | AED 10,000 | 2.85% | Varies | Yes |
| Emirates NBD | AED 5,000 | 2.9% | AED 2,437 | No |
| Al Wifaq Finance | AED 5,000 | 2.7% | AED 2,200 | No |
| Noor Bank | AED 8,000 | 3.49% | AED 2,235 | Yes |
| Commercial Bank of Dubai | AED 8,000 | 3.14% | AED 2,220 | Yes |
| ADIB (Expats) | AED 8,000 | 3.85% | AED 2,251 | Yes |
| Citibank | AED 8,000 | 3.7% | AED 2,245 | Yes |
| NBF | AED 5,000 | 3.6% | AED 2,240 | Yes |
| Simplylife (Salary Transfer) | AED 5,000 | 4.36% | AED 2,274 | Yes |
From the table above, CBD Absher Personal Finance offers the lowest interest rate for personal loan in UAE at 2.45% flat, followed closely by Al Wifaq and Emirates Islamic.
Conclusion:
When choosing a personal loan in the UAE, compare offers based on:
- Interest rate (flat vs. reducing)
- Monthly installment
- Salary requirement
- Need for salary transfer
- Your nationality
Always use the loan calculators available on bank websites to estimate the cost based on your salary, loan amount, and tenure.
Understanding the personal loan interest rate Dubai banks offer—especially if you’re an expat—is essential for making the right financial decision.
