UAE business loan calculator: flat vs reducing rate
A flat rate charges interest on the original loan amount for the whole term, so the real cost is much higher than it looks. A AED 500,000 loan at 6% flat over 3 years costs AED 90,000 in interest, with monthly instalments of about AED 16,389, which equals a reducing rate (APR) of roughly 11%.
Reviewed by Countify's ACCA/FCCA chartered certified accountants · Updated
- Monthly instalment
- AED 16,388.89
- Total interest
- AED 90,000.00
- Equivalent reducing rate (APR)
- 11.08%
UAE banks often quote business loans at a flat rate, charged on the original amount for the whole term. The reducing (APR) figure is the true comparable cost, usually close to double the flat rate.
Results are estimates for general information, not tailored advice.
AED 500,000 at a 6% flat rate
Monthly instalments.
| Term | Monthly instalment | Total interest | Equivalent reducing rate (APR) |
|---|---|---|---|
| 1 year | AED 44,166.67 | AED 30,000.00 | 10.9% |
| 3 years | AED 16,388.89 | AED 90,000.00 | 11.08% |
| 5 years | AED 10,833.33 | AED 150,000.00 | 10.85% |
Processing fees and insurance raise the true cost further.
Comparing offers
Always compare loans on the reducing rate (APR), and add processing fees, insurance and early settlement charges. Interest on business loans is deductible for corporate tax, subject to the interest limitation rules for large borrowers.
Frequently asked questions
What is the difference between flat and reducing rates?
A flat rate charges interest on the full original amount every year; a reducing rate charges interest only on the balance still owed, so it is the true cost.
Bookkeeping and management accounts
Monthly bookkeeping in Xero, Zoho Books or QuickBooks with management accounts you can run the business on, for a fixed fee.