Learn about interest rates

Knowing about the different types of interest rates will empower you to make the best decision when applying for a loan.

If you're considering taking out a loan, it is important that you understand the difference between APR and flat interest rates.

At first glance, flat rates appear considerably more attractive. However, because of the way they are calculated, a flat rate results in a higher monthly repayment amount than an APR of the same rate, by a significant margin.

How is APR interest calculated?

The quoted APR interest rate is applied to the reducing balance of the loan over the repayment period. As a result, you pay interest only on your remaining balance, which will have significantly reduced in the final period of the loan repayment.

How is flat rate interest calculated?

The quoted flat interest rate is applied to the original value of the loan throughout the loan repayment period. Therefore, you pay interest on the full loan amount in the final period of the loan, even though your remaining balance will by then be greatly reduced.

Still confused? Don't worry - you're not alone. Use our quick converter to check whether you should go with an APR or flat interest rate.

Flat Interest Rate VS APR

Enter a loan amount between 1 and 1,000,000 AED
Enter a loan period between 1 and 48 months
Enter a valid interest rate

Monthly Payment (AED):

Equivalent APR Interest Rate (%):

APR vs Flat Interest Rate

Enter a loan amount between 1 and 1,000,000 AED
Enter a loan period between 1 and 48 months
Enter a valid interest rate

Monthly Payment (AED):

Equivalent Flat Interest Rate (%):

Please note that figures stated are indicative and should only be used as a guide. They should not be considered final calculations or as a commitment from NBF to grant a loan. To establish final accurate figures, please visit any NBF branch where a member of our team will be happy to assist you, ensuring you get the best deal to match your requirements.