Flat rate vs annual percentage rate (APR)
Most personal finance offers in Saudi Arabia advertise a flat rate: profit is charged on the full amount for the whole term, even as you pay it down.
| Item | Formula |
|---|---|
| Total profit | amount × rate × years |
| Monthly installment | (amount + profit) ÷ months |
The APR shows the real cost, and the Saudi Central Bank requires banks to disclose it. A 3.5% flat rate over 5 years is roughly a 6.5% APR, so always compare offers by APR.
FAQ
What is the maximum admin fee?
Under consumer finance rules, admin fees can't exceed 1% of the finance amount or SAR 5,000, whichever is lower.
Can I repay early?
Yes. The bank can't charge profit for the remaining term, but may charge a reinvestment cost of up to 3 months' profit.
These are estimates. The final offer depends on the bank, your credit record and your employer.