RAKAB is not a financial adviser. This guide explains the basics in plain language. It contains no rates and no recommendation. RAKAB does not arrange or approve finance; every finance product is contracted directly with a licensed bank or finance company.
Conventional car finance
The bank lends you the money to buy the car. You repay the loan in monthly instalments, and the bank charges interest for lending you the money. The car usually serves as security for the loan until it is repaid (to be verified per bank).
Islamic car finance (Murabaha)
Murabaha follows Islamic finance principles, which do not allow interest. Instead, the bank buys the car and sells it to you at an agreed price that includes the bank's profit. You pay that price in monthly instalments. The price is agreed at the start.
What they have in common in the UAE
- Down payment: at least 20%. Under UAE Central Bank rules you pay at least 20% of the car's price yourself; banks can finance at most the remaining 80%.
- Tenure: typically up to 5 years.
- Both are repaid in monthly instalments over the agreed term.
Questions to ask any lender
- What is the total amount I will pay over the whole term, including all fees?
- Which fees apply – for processing, early settlement and late payment?
- What insurance do you require?
- What happens if I want to settle early?
Compare offers on the total amount you will pay, not only on the monthly instalment.
Where RAKAB fits
Monthly figures shown on RAKAB are illustrative and are not a finance offer. RAKAB is a technology and lead-generation platform: it does not give financial advice, does not approve loans and does not recommend any lender.