Formula
What this the UAE debt buyout calculator does
Compares your current loan against a refinance offer from another bank (the UAE 'debt buyout' or 'loan transfer' product). You enter the current loan's outstanding balance, monthly payment, remaining tenure, and APR; then the new offer's APR and tenure. The calculator shows: the estimated early settlement fee (capped at 1 months interest by CBUAE - Central Bank of the UAE), the new monthly payment after the fee is rolled in, your monthly savings, and your lifetime savings or extra cost. The lifetime number is the key one - a lower monthly with a longer tenure often costs more in total interest, so 'cheaper per month' is NOT the same as 'cheaper overall'.
Debt buyout under CBUAE - Central Bank of the UAE
Debt buyout (also called 'loan transfer' or 'balance transfer') is regulated by CBUAE - Central Bank of the UAE. Key rules: (1) Early settlement of your existing loan triggers a settlement fee, capped at 1 month of interest on the outstanding balance. (2) The new bank's APR is the all-in rate - it must include profit / interest, processing fees, and life insurance premiums per the APR disclosure rules. (3) Buyout loans are subject to the same Debt Burden Ratio (DBR) limits as new loans - usually 55% in the UAE, lower for some demographics. (4) You have the legal right to refuse a buyout offer at any point during negotiation, even after signing initial paperwork, until the new contract is final.
When debt buyout actually pays off
A buyout is worth it when: (a) the new APR is at least 1.5 to 2 percentage points lower than your current APR, AND (b) you keep the new tenure equal to or shorter than your current remaining tenure. The trap most people fall into: the buying bank quotes a much lower monthly because they extend the tenure (e.g. from 4 remaining years to 7 new years). Yes, the monthly drops, but you pay interest for 3 extra years - often more total cost than staying. The 'Lifetime savings' card in this calculator is the truth-teller. If lifetime savings shows red (negative), the new offer is actually more expensive. Common scenario where buyout DOES pay off: you locked in at 9-10% APR years ago when rates were high; current market rate is 5-6%; you refinance at the new rate keeping the same tenure.
Common mistakes to avoid
(1) Comparing only monthly payments - always look at total cost over the full new tenure (lifetime savings card). (2) Forgetting the settlement fee - banks sometimes 'roll it in' silently, so the new loan principal is higher than your old balance. The 'New monthly' card here already includes the fee. (3) Not reading the new APR fine print - some 'low rate' offers have hidden processing fees that push the effective APR up by 1-2%. Demand the official APR disclosure document. (4) Stretching the tenure unnecessarily - if you can afford the same monthly as your current loan, keep the new tenure shorter for maximum savings. (5) Refinancing in the last 12-18 months of an existing loan - by that point most of your remaining payment is principal, so refinancing saves almost nothing while triggering the settlement fee.
Documents typically required by the UAE banks
For a debt buyout application, you'll generally need: (1) Recent statement from your existing bank showing the outstanding balance and account number. (2) Original loan contract from the existing bank (some banks request this to verify the APR and remaining tenure). (3) Salary certificate or 3 months of bank statements showing income. (4) Valid Emirates ID / National ID. (5) Recent utility bill for proof of address. (6) The Settlement quote from your existing bank (a letter showing the exact payoff amount and any fees). The new bank handles the actual payoff directly with the old bank once the new contract is signed - you do not handle money in between.
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