Car finance is the most misleading corner of UAE lending, because almost every bank quotes it as a flat rate — the number that looks about half of what the loan really costs. Strip away the marketing and the picture is much clearer. Across the 14 lenders we track, the true reducing-balance cost of a UAE car loan currently runs from about 3.43% to 6.25%. This guide shows the full table on that honest basis, and covers the three rules that actually shape a car deal: the down payment, the term, and the early-settlement charge.
The full UAE car-loan table
Every flat rate below is converted to its exact reducing-balance equivalent over the 60-month term, so a flat-quoted loan and an APR-quoted loan compare honestly. The “Rate (from)” cell reads e.g. ”3.43% (from 1.79% flat)” — the real cost first, the advertised flat figure in brackets.
| Lender | Product | Rate (from) | Rate type | Min salary | Processing fee |
|---|---|---|---|---|---|
| Sharjah Islamic Bank | SIB Car Finance (Murabaha) | 3.43% (from 1.79% flat) | Flat (converted) | AED 5,000 | 1% capped AED 2,500 |
| Commercial Bank International | CBI Auto Loan | 3.75% | Reducing | AED 15,000 | 1% capped AED 2,500 |
| First Abu Dhabi Bank (FAB) | FAB Car Loan | 3.79% | Reducing | AED 7,000 | 1.05% capped AED 2,625 |
| Abu Dhabi Commercial Bank (ADCB) | ADCB Car Loan | 3.8% (from 1.99% flat) | Flat (converted) | Not published | 1.05% |
| Dubai Islamic Bank | Al Islami Auto Finance | 3.93% | Reducing | AED 3,000 | 1.05% capped AED 2,620 |
| First Abu Dhabi Bank (FAB) | FAB Islamic Car Finance (Murabaha) | 4.1% | Reducing | AED 7,000 | 1.05% capped AED 2,625 |
| Commercial Bank of Dubai | CBD Islami Vehicle Finance | 4.15% (from 2.18% flat) | Flat (converted) | Not published | 1% capped AED 2,625 |
| RAKBANK | RAKauto Loan | 4.18% | Reducing | AED 5,000 | 1% capped AED 2,500 |
| RAKBANK | RAKislamic Auto Finance | 4.18% | Reducing | AED 5,000 | 1% capped AED 2,500 |
| Ajman Bank | Standard Auto Finance (Murabaha) | 4.28% (from 2.25% flat) | Flat (converted) | Not published | 1% capped AED 2,500 |
| National Bank of Fujairah | NBF Auto Loan | 4.3% | Reducing | Not published | 1% capped AED 2,500 |
| Emirates NBD | Fixed Rate Auto Loan | 4.4% | Reducing | AED 5,000 | 1.05% capped AED 2,625 |
| Emirates Islamic | Auto Finance (Murabaha) | 4.72% | Reducing | AED 10,000 | 1.05% capped AED 2,625 |
| Abu Dhabi Islamic Bank (ADIB) | ADIB Car Finance | 4.75% | Reducing | AED 5,000 | 1% capped AED 2,500 |
| Al Hilal Bank | Al Hilal Auto Finance (Murabaha) | 5.17% | Reducing | AED 5,000 | 1.05% capped AED 2,625 |
| Commercial Bank of Dubai | CBD Auto Loan | 5.5% | Reducing | Not published | 1% capped AED 2,625 |
| Mashreq | CashIn Car Loan | 6.25% | Reducing | AED 7,000 | 1.05% |
The cheapest published car finance we track is the SIB Car Finance (Murabaha) from Sharjah Islamic Bank at 3.43% (from 1.79% flat); the most expensive headline is the CashIn Car Loan from Mashreq at 6.25%. If you were ranking on the flat numbers alone you’d order these loans quite differently — and pick a pricier one thinking it was cheap. For the full explanation of why flat rates deceive, read our flat rate vs reducing balance guide.
Rule 1: the 20% minimum down payment
The UAE Central Bank caps car finance at 80% of the vehicle’s price, so you must put down at least 20% yourself. On a AED 100,000 car that’s a AED 20,000 deposit minimum; the bank finances the rest. Some banks ask for a larger deposit on used, high-mileage or older vehicles, or for customers who don’t transfer their salary, so treat 20% as the floor, not the standard.
Rule 2: the 60-month maximum term
Car finance is capped at a 60-month (five-year) term. A longer term lowers the monthly instalment but increases the total interest you pay, and because the car depreciates faster than the loan amortises early on, stretching to the full 60 months can leave you owing more than the car is worth for a spell. Match the term to how long you plan to keep the car, and remember the vehicle is mortgaged to the bank until you settle — the registration is held in the bank’s favour and released only when the loan clears.
Rule 3: the early-settlement charge most guides get wrong
If you pay a car loan off early, the Central Bank caps the early-settlement fee — but the car-loan cap is not the same as the one for home and personal loans, and this is where most comparison sites are simply wrong. For home loans and other consumer loans the cap is “1% of the outstanding balance or AED 10,000, whichever is lower.” For car loans the rulebook says simply 1% of the outstanding balance — with no AED 10,000 ceiling. Do not assume the AED 10,000 cap applies to car finance; it doesn’t.
One more subtlety worth knowing: these caps are VAT-exclusive. A bank that charges 1.05% including VAT — i.e. 1% plus 5% VAT — is compliant, not overcharging. So a car-loan settlement fee that reads slightly above 1% is usually just VAT on top of the 1% cap.
New vs used, and what the bank checks
New cars are usually financed a little more keenly than used ones, and banks often ask for a larger down payment on older or higher-mileage vehicles because they depreciate faster and are harder to resell if the loan defaults. Some lenders cap the age a used car can reach by the end of the term, so a five-year loan on an already-old car may be refused or shortened. Beyond the car itself, the bank checks the same things it checks for any loan: your salary against the product’s minimum, your employer, your AECB credit history and your existing commitments against the 50% debt-burden ratio. A car instalment counts toward that DBR, so a large loan can crowd out other borrowing you were planning — worth modelling before you commit.
Insurance and the total cost
A financed car must carry comprehensive motor insurance for the life of the loan, and the bank will insist on it, so factor the annual premium into your running costs rather than treating the instalment as the whole story. Some banks bundle or arrange the insurance; others leave you to source it, which usually works out cheaper. As with any loan, the honest way to rank two car deals is the total cost of credit — every instalment plus the processing fee over the term you choose — not the flat rate on the showroom board. A loan with a marginally higher converted rate but a capped, smaller processing fee can beat a lower-rate loan whose fee runs uncapped on a large amount.
Putting it together
The cheapest headline rate is rarely the cheapest loan once you fold in the down-payment terms, the term you choose and the fees. That’s exactly what our loan finder does: it converts every flat quote to its true cost, checks the 80% LTV and 60-month limits, and ranks what’s left by the total cost of credit over your term rather than the rate on the showroom board.
Before you commit to owning at all, our Car Lease vs Buy Calculator compares a car loan against leasing over the years you’ll keep the vehicle, and the Car vs Taxi Calculator checks whether owning beats ride-hailing for your mileage. If a Sharia-compliant Murabaha structure matters to you, our Islamic vs conventional finance guide shows how the two compare on cost.
Quick Reference
| Question | Answer |
|---|---|
| Products compared | 17 from 14 UAE lenders |
| Cheapest true car rate | 3.43% (from 1.79% flat) — Sharjah Islamic Bank |
| Most expensive headline | 6.25% — Mashreq |
| Minimum down payment | 20% (80% max LTV) |
| Maximum term | 60 months |
| Early-settlement fee | 1% of outstanding, no AED cap for car loans (VAT-exclusive) |
| Data source | Lender websites + Key Facts Statements, verified August 2026 |
Frequently Asked Questions
What is the current car loan interest rate in the UAE?
On an honest reducing-balance basis, the loans we track run from about 3.43% to 6.25% across 14 lenders — the cheapest published being the SIB Car Finance (Murabaha) from Sharjah Islamic Bank at 3.43% (from 1.79% flat). Showroom boards quote flat rates, which look roughly half the true cost, so never compare a flat quote against an APR quote directly.
What is the minimum down payment for a car loan in the UAE?
20%. The Central Bank caps car finance at 80% of the vehicle price, so on a AED 100,000 car you need AED 20,000 of your own money. Banks often ask for more on older, high-mileage or used vehicles, and on applicants who do not transfer their salary — treat 20% as the floor rather than the norm.
What is the maximum car loan term in the UAE?
60 months — five years. A longer term lowers the instalment but raises total interest, and because a car depreciates faster than the loan amortises in the early years, a full 60-month term can leave you owing more than the car is worth for a period. The vehicle stays mortgaged to the bank until you settle.
What does it cost to settle a UAE car loan early?
1% of the outstanding balance — and, unlike home and personal loans, there is no AED 10,000 ceiling on car finance. Most comparison sites get this wrong. The cap is also VAT-exclusive, so a bank charging 1.05% is charging the 1% cap plus VAT, not overcharging you.
Does a car loan affect how much mortgage I can borrow?
Yes. Your car instalment counts towards the 50% debt-burden ratio the Central Bank applies to all borrowing, so a large car loan directly reduces the mortgage a bank will approve. If a property purchase is coming, model both together before you sign for the car.
Do I have to buy comprehensive insurance on a financed car?
Yes — a financed vehicle must carry comprehensive motor insurance for the life of the loan, and the bank will require proof of it. Some lenders bundle the policy; sourcing it yourself is usually cheaper. Budget the annual premium as part of the running cost, not as an extra.