Flat rate or reducing rate
A flat rate charges profit on the full amount for the whole term, even as you repay it. A reducing rate charges profit only on what you still owe. The same number gives very different costs: 5% flat over five years costs almost twice as much as 5% reducing.
The APR (annual percentage rate) puts both on the same scale, and the Saudi Central Bank sets one method for calculating it wherever lenders disclose it. Compare offers by their APR, not the headline rate.
Frequently asked questions
Why does my bank's installment differ?
Banks may add fees, insurance or VAT on fees, start the first installment on a different date, or round differently. Ask for the disclosure statement with the APR.
Is Murabaha calculated like a loan?
For the installment arithmetic, a Murabaha at a flat profit rate works like a flat-rate loan. Whether a product is Shariah-compliant depends on its contract, which this calculator does not judge.
What is APR?
The annual percentage rate: the yearly cost of the finance including fees. It's the fairest way to compare offers, and SAMA requires Saudi lenders to show it.
What's the difference between a flat rate and a reducing-balance rate?
A flat rate charges profit on the original amount for the whole term. A reducing-balance rate charges it only on what you still owe. That makes a 5% flat rate over five years cost roughly the same as 9% APR.
Can I pay off my finance early?
Usually, yes. In Saudi Arabia, SAMA's rules cap what a lender can charge for early settlement of consumer finance at about three months of future profit. Ask your bank for a settlement letter with the exact amount.
Is anything I enter sent or stored?
No. Every calculation runs in your browser, and nothing you type is sent to us or saved.