How is a Saudi bank personal loan repayment calculated?

A conventional bank loan uses a reducing-balance APR. The monthly payment is the standard amortising annuity: principal times the monthly rate, divided by one minus (one plus the monthly rate) to the power of minus the number of months. Interest is charged only on the outstanding balance.

How does flat-rate murabaha finance differ?

Islamic murabaha and tawarruq quote a flat profit rate on the full original principal for the whole term. Total profit equals principal times the flat rate times the number of years, and the monthly payment is the total divided by the months. It looks cheaper but its effective APR is roughly double the flat headline.

Why is the effective APR higher than the flat rate?

Because a flat rate charges profit on the full original amount even as you pay it down, whereas a reducing-balance APR charges only on what you still owe. As a rule of thumb a flat rate of X% behaves like an effective APR near 2X%, so always compare offers on the effective rate.

What rates are typical in Saudi Arabia?

Conventional personal loans commonly sit in the 4-12% APR range depending on your salary, employer and credit profile. SAMA, the central bank, caps the total cost of consumer borrowing, so the figure on a regulated offer must stay within that limit.

Are my numbers private?

Yes. The whole calculation runs in your browser. Nothing you enter is uploaded or stored anywhere.

Saudi Arabia Personal Loan Calculator

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This Saudi Arabia personal loan calculator shows the monthly repayment and total cost of borrowing in the Kingdom, and — crucially — lets you compare a conventional reducing-balance bank loan against a flat-rate Islamic murabaha product on equal terms.

How it works

The calculator handles the two financing styles you will actually be quoted:

Bank loan (reducing-balance APR). Interest accrues only on the outstanding balance, so the payment follows the standard amortising annuity formula:

M = P × r / (1 − (1 + r)^−n)

where P is the loan, r is the monthly rate (APR ÷ 12) and n is the number of months.

Islamic murabaha (flat profit rate). Profit is charged on the full original principal for the whole term:

total profit = P × flatRate × years
monthly      = (P + total profit) / months

Because the profit ignores the falling balance, the tool also estimates the effective APR, which is close to double the flat headline rate — the number you should use to compare deals.

Example

Borrow SAR 100,000 over 5 years. At a 7% reducing-balance APR the monthly payment is about SAR 1,980 with roughly SAR 18,800 total interest. A 7% flat murabaha rate instead charges SAR 35,000 profit over the term — a monthly payment near SAR 2,250 and an effective APR around 12.8%. Same headline number, very different cost.

Notes

This is an estimate. Real offers depend on your salary transfer, employer, credit record and any administrative fees, and all regulated consumer finance must stay within SAMA’s total-cost-of-borrowing cap. Confirm the exact figures on your finance agreement before committing.