📃 How to get a personal loan in the UAE: Rates, rules, and what to compare

Kacper Duda
Jul 23
4 min read

Thinking about getting a personal loan in the UAE? Whether it’s for an emergency, a relocation, or consolidating debt, loans can be helpful — but they’re also one of the most expensive ways to borrow.

Before you sign anything, it’s worth understanding how much you can borrow, what it’ll cost you, and what traps to avoid. Read on to learn:

How UAE banks calculate how much you can borrow — and what impacts your rate
What to compare (beyond interest) to get the best deal
In the news: Best and worst university degrees for earning high salaries in the UAE

Borrowing with purpose

Personal loans can be useful - but only when there's a clear reason. They’re designed to cover one-off, unavoidable expenses: emergency medical bills, relocation costs, or consolidating expensive debt. Used poorly, they can spiral into long-term financial strain.

The golden rule? Don’t borrow for lifestyle upgrades or ongoing spending you can’t afford.

How much can you actually borrow?

Personal lending in the UAE is tightly regulated by the Central Bank. No matter how much a bank likes you, the following caps apply:

Maximum loan amount: 20× your monthly income
Maximum loan term: 48 months
Maximum monthly repayments on all loans & credit cards: 50% of your income (30% if the loan extends beyond retirement age)

This repayment cap is known as your Debt Burden Ratio (DBR). To calculate it:

DBR = (total monthly debt repayments / monthly income) * 100

If you're above 50%, banks legally can't lend to you — and realistically, you shouldn't be borrowing.

What makes you a strong applicant

Once you pass the regulatory filters, your final offer depends on your individual profile. Banks tend to reward:

Higher and stable income
Employment with a “listed” company (pre-approved by the bank)
Existing salary transfer to the same bank
A good credit score with a clean repayment history (learn more about credit scores here)

Not all of these are within your control, but knowing what matters helps you understand the rate you’re offered and what you might improve before applying.

What will this loan really cost you?

In the UAE, personal loans are always repaid on a reducing balance basis — meaning interest is charged only on the outstanding loan amount. But many banks still quote a flat rate for marketing purposes, because it looks lower.

Here’s the catch: a flat rate of 4.5% usually translates to a true cost of around 7.9% reducing. It’s the same loan, same repayments, just presented differently. To convert, between the two, you can use this formula:

Reducing rate ≈ flat rate × 1.814

The easiest fix though? Always look at the total repayment amount over the life of the loan.

Example: AED 100,000 load over 4 years

Loan Amount	Term	Flat rate	Reducing rate	Total Interest Paid	Total Repayment
AED 100,000	4 yrs	4.5%	7.9%	~AED 18,000	~AED 118,000

The fees they don’t advertise

Beyond the interest rate, most loans come with a stack of extras. Key ones to watch:

Processing fee - usually 1% of the loan amount + VAT
Early settlement fee - capped at 1% of the remaining principal
Life insurance - sometimes mandatory, sometimes optional and it may be added to the loan
Deferred repayment - looks good as it allows you to start repaying later (e.g. 90 days after you get the money), but interest accumulates from day 1 so it ends up costing you more

Always ask whether fees are rolled into the loan or charged upfront. This affects your effective cost.

How to get the best deal

Start with the bank where your salary is already going in as they may have a pre-approved offer. But never stop there. Compare at least two more options and ask each provider to share:

A full repayment schedule
The total repayment amount, not just the rate
Clarification on fees and if life insurance is required
Once you have competing offers, try to negotiate with your favourite provider(s)

Before you sign

Quick final checks before you move forward:

✅ Purpose: Do you have a clear purpose for the loan?

✅ Shop around: Have you compared multiple offers, including total repayment?

✅ Fees: Do you understand every fee involved?

✅ Repayment ability: Are you borrowing within your means, with a clear plan to repay?

✅ Purpose validation: Will this loan improve your position — or create future stress?

IN THE NEWS - Best and worst university degrees for high earning potential in the UAE

If you're aiming to maximise your future salary in the UAE, your university degree still plays a major role in how much you’re likely to earn.

Unsurprisingly, Law, Medicine, Finance and Accounting remain among the top earners. But the UAE’s shifting priorities are influencing the rankings. Degrees in Computer Science, AI, and Data Science now feature strongly — reflecting the country's growing digital and tech ambitions. Perhaps more unexpectedly, Environmental Science is climbing the list too, as sustainability takes on greater national focus.

The full Khaleej Times article breaks down which degrees offer high (and low) earning potential. While the numbers focus on entry-level jobs, the trends hold true further up the career ladder too.

Disclaimer: Please bear in mind that this email does not constitute financial advice. Any choices you make you are solely responsible for. We always aim to provide highest quality, independent views but do your own research to ensure you’re comfortable with any changes you make to your personal finances.