Early Settlement Fees in the UAE: What You Could Pay
Settling financing early can save you profit, but it may come with a fee. Knowing it in advance helps you decide.
What is an early settlement fee?
A fee some banks charge when you repay financing before the end of the agreed period.
The Central Bank cap
Central Bank rules limit this fee. It is generally capped at 1% of the outstanding principal, up to a maximum of AED 10,000. Banks publish their own fees in their Key Facts Statement, and VAT may apply on top.
An illustration
On an outstanding balance of AED 50,000, a 1% fee is AED 500. With 5% VAT on the fee (AED 25), the total is AED 525. This is an illustration only, and your bank’s terms apply.
Why it matters for a debt buyout
In a debt buyout, your current bank is settled early, so this fee becomes part of the total cost. Compare it with what you may save under the new terms.
What to ask your bank
The exact fee and how it is calculated, whether there is a waiver window, whether partial settlement carries a fee, and a written settlement figure.
Common questions
Can the fee be negotiated or waived?
Some banks waive or reduce it in certain cases or periods. It is always worth asking.
Does the cap apply to every type of financing?
Rules differ by product, so check the Key Facts Statement for your specific financing.
Rates, fees and requirements are set by each bank and can change. Not sure how this applies to you? Request a call and we will go through it together.