TRW & Co · Banking, Finance & Capital Markets
Consumer Finance in the UAE
Consumer finance in the UAE is tightly regulated by the Central Bank. Personal loans are capped by salary, BNPL is licensed short-term credit, and the 2025 Central Bank law bans compound interest and requires guarantees proportionate to income. This guide explains the licensing routes, product limits, conduct rules and collection risks for lenders, fintechs and their partners.
Key pointUnder the 2025 Central Bank law, a lender's claim against an individual can be inadmissible if it lacked guarantees proportionate to the borrower's income, so origination files now decide recoverability.
At a glance
Salary-linked limits
Bank deductions for all loans and cards are capped at 50% of gross income, and personal loans at 20 times salary over a maximum of 48 months.
BNPL is regulated credit
Since 2023, BNPL is short-term credit: interest-free, up to 12 months, fees capped at 30% and exposure limited to AED 20,000 or three months' income.
Compound interest banned
Federal Decree-Law No. (6) of 2025, in force from 16 September 2025, prohibits compound interest on customer credit facilities and widens CBUAE enforcement.
Conduct rules apply throughout
The Consumer Protection Regulation and Standards require Key Facts Statements, Arabic and English disclosure, cooling-off rights, affordability checks and fair collections.
Sanadak hears complaints
Customers who remain dissatisfied 30 days after complaining to their institution can escalate to the CBUAE's Ombudsman Unit, Sanadak.
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What consumer finance in the UAE covers
Consumer finance in the UAE covers credit and related services provided to individuals: personal loans, car finance, credit cards, overdrafts, salary advances, buy-now-pay-later (BNPL) plans, Islamic consumer financing and the collection of those debts. Mortgages share many of the same rules but have their own regime, covered on our real estate finance page.
The sector is regulated more tightly than many new entrants expect. The Central Bank of the UAE (CBUAE) sets borrowing limits linked to salary, caps on many fees, conduct rules that apply from the first advertisement to the last collection call, and licensing requirements that reach fintech lenders and BNPL platforms. Since September 2025, a new Central Bank law has added statutory protections for individual borrowers and widened the regulator's enforcement powers.
The legal question arises for three groups: banks and finance companies designing products and collection practices; fintechs, retailers and platforms that want to offer credit at checkout or through an app; and investors and partners funding those businesses. Each needs to know which licence applies, which product rules bite and where the conduct risk sits.
The legal and regulatory framework
The 2025 Central Bank law
Federal Decree-Law No. (6) of 2025 regarding the Central Bank, Regulation of Financial Institutions and Activities, and Insurance Business came into force on 16 September 2025, replacing the 2018 law. Credit and funding is a licensed financial activity, and the law states that using a particular technology or business model does not by itself take an activity outside the perimeter. Unlicensed financial activity is a criminal offence, with fines reported to reach AED 500 million.
For consumer lenders, the law introduced or strengthened several protections. Compound interest on customer credit facilities is prohibited, with detailed rules to come from the Central Bank. Fees, terms and risks must be clearly disclosed. Guarantees taken from individuals and sole proprietorships must be proportionate to their income and the size of the facility, and claims that lack the required guarantees are inadmissible before courts and arbitral tribunals. Licensed institutions must also maintain anti-fraud controls, including strong authentication and transaction monitoring.
Product rules for retail lending
Bank lending to individuals is governed by the CBUAE's Regulation No. 29/2011 regarding bank loans and other services offered to individual customers. Its core limits are well known in the market: total deductions for all loans and cards are capped at 50 per cent of gross salary and regular income, personal loans are capped at 20 times salary with a maximum term of 48 months, and car loans are limited to 80 per cent of the vehicle's value over a maximum of 60 months. Early settlement fees and late payment charges are capped, and lenders may not take blank cheques.
Finance companies are subject to the CBUAE's Finance Companies Regulation, which sets its own rules, including the short-term credit regime for BNPL described below. Anyone offering consumer finance in the UAE should confirm which instrument applies to its licence before designing limits and pricing.
Conduct and complaints
The Consumer Protection Regulation (Circular No. 8/2020) and the accompanying Standards apply to all licensed financial institutions dealing with individuals and sole proprietors. They require fair treatment, plain-language disclosure in Arabic and English, a Key Facts Statement, a cooling-off period, affordability and suitability assessments, responsible financing, complaints handling, and help for borrowers in difficulty, including access to a credit counsellor.
The CBUAE's Ombudsman Unit, Sanadak, handles complaints that institutions have not resolved, and a Telemarketing Regulation effective from 31 March 2026 tightens rules on calling and marketing to customers.
| Area | Main rule | Source |
|---|---|---|
| Debt burden | Total deductions capped at 50% of gross salary and regular income; 30% where repayment runs into retirement | Regulation 29/2011 |
| Personal loans | Up to 20 times salary; maximum 48 months | Regulation 29/2011 |
| Car loans | Up to 80% of vehicle value; maximum 60 months; secured on the vehicle | Regulation 29/2011 |
| BNPL (short-term credit) | Interest-free, up to 12 months; total fees no more than 30% of the credit; exposure capped at the lower of AED 20,000 or three months' verified net income | Finance Companies Regulation (2023) |
| Interest | Compound interest on customer credit facilities prohibited | Decree-Law No. (6) of 2025 |
| Disclosure and conduct | Key Facts Statement, Arabic and English disclosure, cooling-off, affordability, fair collections | Consumer Protection Regulation and Standards |
Who can lend: licensing routes
Consumer finance in the UAE can only be provided by an entity the CBUAE has licensed for that activity, or by an agent of one. The main routes are:
Banks and finance companies
Banks hold the broadest licence and can lend, issue cards and take deposits. Finance companies are licensed to provide credit without taking deposits, and are the usual route for specialised lenders such as auto and consumer durable finance providers. Both must meet capital, governance, risk management and consumer protection requirements, and both face full CBUAE supervision.
Buy-now-pay-later providers
The Finance Companies Regulation issued on 29 September 2023 recognised BNPL as short-term credit: credit for up to 12 months to buy identifiable goods or services, without interest, collateral or security deposit. It may be offered only by licensed banks and finance companies (or their agents) or by a restricted licence finance company authorised by the CBUAE. A restricted licence is granted for an initial three years and is renewable. Before giving a borrower a total limit above AED 5,000, the provider must check the borrower's credit report.
Fintech and retailer partnerships
Many app-based and point-of-sale credit products are built as partnerships: a licensed lender provides the credit while a technology company provides the customer interface. The 2025 law's focus on platforms that facilitate financial services means the technology partner's role must be analysed carefully. If it is marketing, arranging or effectively controlling credit decisions, it may need its own authorisation or must operate strictly as an agent under the lender's control. Our fintech regulation page explains the sandbox and licensing options.
In UAE consumer lending, the salary-linked limits are the easy part. Regulatory risk usually sits in marketing, collections and the way a partner platform presents the product.
Designing compliant products
Product design is where most compliance problems begin. Pricing must be disclosed as an effective annual rate on a reducing-balance basis, and any advertised flat rate must be accompanied by the equivalent effective rate. Fees must be transparent, consistent with CBUAE caps and approved fee schedules, and explained in the Key Facts Statement before the customer commits.
Affordability assessments must use verified income and existing commitments, including credit bureau data from Al Etihad Credit Bureau. Products marketed as salary transfer or non-salary transfer have different risk profiles and documentation requirements. Islamic consumer products must also satisfy Sharia governance requirements and cannot replicate prohibited interest through penalty structures; see our Islamic finance page.
Marketing must be clear, fair and not misleading across every channel, including social media, influencers and in-app messages. The CBUAE treats a promotion as part of the product, so the lender is responsible for what partners and affiliates say. Our financial promotions page covers advertising rules across the onshore, DIFC and ADGM regimes.
Launching a consumer finance product
- Define the activity and perimeter. Decide what the product is in regulatory terms (personal loan, card, BNPL, salary advance or Islamic financing) and who provides the credit.
- Choose the licensing route. Operate under an existing bank or finance company licence, apply for a finance company or restricted licence, or structure a partnership in which a licensed lender provides the credit.
- Build the product documentation. Prepare terms and conditions, a Key Facts Statement, pricing and fee schedules, and disclosures in Arabic and English.
- Set credit and affordability policies. Implement debt burden checks, credit bureau enquiries and limits consistent with CBUAE rules and the lender's risk appetite.
- Prepare conduct controls. Approve marketing, telemarketing scripts, complaints procedures, collections policies and vulnerable customer processes.
- Engage the regulator. Seek any required approvals for new products or fees, and update policies and outsourcing registers for third-party partners.
- Launch, monitor and review. Track complaints, arrears and collection outcomes, and review the product as rules evolve under the 2025 law.
Collections, defaults and disputes
Collections are the area of consumer finance in the UAE where regulatory, criminal and reputational risks converge. The Consumer Protection Regulation requires lenders to identify borrowers in difficulty early, offer help, and inform delinquent borrowers about credit counselling. Collection practices must be fair and must not harass or mislead. Lenders remain responsible for collection agencies they appoint.
Lenders must also consider the legal tools available. Bounced cheques can now be presented for direct execution under the commercial transactions law, and claims can be pursued through summary payment orders, which our debt recovery page explains. Individuals in serious difficulty may use the 2019 personal insolvency law, which allows court-supervised settlement plans; see our page on insolvency and bankruptcy.
Before enforcing against an individual, check that the facility was supported by guarantees proportionate to the borrower's income and the facility size. Under the 2025 Central Bank law, claims lacking the required guarantees are inadmissible, so a weak origination file can defeat recovery years later.
Documents and records to keep
Supervisors, Sanadak and courts all decide consumer finance in the UAE disputes largely on the documents. A lender or platform should be able to produce, for each customer and product:
- The signed or electronically accepted terms and conditions and the Key Facts Statement in the version shown to the customer, with a timestamped record of acceptance.
- Evidence of income verification, existing commitments, credit bureau checks and the affordability decision, including any overrides.
- Guarantee and security documents, showing why the guarantee was proportionate to income and facility size.
- Marketing materials and scripts used to sell the product, and records of partner and affiliate approvals.
- Fee schedules and a record of each fee charged, with the basis for it.
- Complaints logs, call recordings for sales and collections, and hardship or restructuring correspondence.
- Agency and partnership agreements, and audit reports on collection agencies and technology partners.
Weak records are the most common reason a lender loses a complaint it should have won. They also undermine recovery: under the 2025 Central Bank law, a claim against an individual can fail if the lender cannot show the required guarantees were taken. Building record-keeping into the customer journey from the start is far cheaper than reconstructing files when a dispute arises.
Risks and common mistakes
Treating BNPL as a payment feature rather than credit
Some platforms describe instalment plans as a checkout or payment option and assume a payments licence or merchant agreement is enough. Since 2023, BNPL in the UAE is short-term credit and may only be provided by licensed banks and finance companies, their agents or restricted licence finance companies. Fees must stay within the 30 per cent cap, credit checks apply above AED 5,000, and exposure per customer is limited. A product that slips outside the definition, for example by charging interest or lasting longer than 12 months, falls into the full consumer lending regime instead.
Partners and affiliates making non-compliant promotions
Retail partners, comparison sites, influencers and sales agents often promote credit products. Their statements are attributed to the lender. Common problems are missing effective rates, overstated approval chances and pressure selling. The lender should approve all marketing materials, contractually control what partners say, monitor channels and act quickly on breaches. The 2026 Telemarketing Regulation adds specific rules on calling customers, which must be built into sales operations.
Fee structures that breach caps
Lenders sometimes add administration, processing or late payment fees that individually seem small but breach CBUAE caps or approved schedules, or that amount in substance to compound interest. Under the 2025 law the prohibition on compound interest is statutory. Review the full lifecycle cost of each product, including what happens when a customer misses payments or restructures, and confirm every charge has a clear basis in the regulations and the Key Facts Statement.
Aggressive or outsourced collections
Collection agencies, repeated calls, contact with employers or family and threats of criminal action can each breach conduct rules. Because the lender is responsible for its agents, a single agency's practices can trigger supervisory action and complaints to Sanadak. Write clear collection standards into agency contracts, audit them, record calls and treat complaints as early warnings. Offering restructuring or hardship options before escalation is both a regulatory expectation and usually better for recovery.
Ignoring the cooling-off and disclosure sequence
Digital journeys often compress disclosure into a single screen and fund the loan instantly. The Consumer Protection Regulation requires the Key Facts Statement and key terms to be provided before commitment and gives customers a cooling-off right after signing. Design the journey so that disclosures are presented, acknowledged and retrievable, and so that cancellation within the cooling-off period can be processed without penalty beyond what the rules allow.
DIFC, ADGM and cross-border lending
The DIFC and ADGM have their own regulators and conduct rules for providing credit, but neither is a practical base for lending to the onshore retail market. An entity licensed by the DFSA or FSRA that wants to lend to UAE residents generally needs to consider CBUAE licensing or partner with an onshore licensed lender. Our pages on DIFC financial regulation and ADGM financial regulation explain the free zone regimes.
Cross-border models raise similar issues. A lender based in the UK, India, Singapore or Saudi Arabia that markets credit to UAE residents through an app may be carrying on a licensed activity in the UAE, depending on how and where the service is provided and promoted. For groups linked to Bangladesh or South Asian remittance corridors, the overlap between consumer credit, payments and remittances needs a coordinated analysis; see our page on payment services licensing.
How TRW & Co helps
We advise lenders, fintechs, retailers and investors on consumer finance in the UAE, with a focus on licensing, product and conduct risk.
Licensing and perimeter
We analyse whether a product or partnership needs CBUAE authorisation, compare finance company, restricted licence and partnership routes, and support licence applications.
Product documentation
We draft loan, card and BNPL terms, Key Facts Statements, fee schedules and disclosures that reflect CBUAE limits and the 2025 law's protections.
Partnership agreements
We structure lender, platform and retailer agreements that allocate regulatory responsibility, control marketing and data, and stand up to supervisory review.
Conduct and collections reviews
We review marketing, telemarketing, complaints and collection practices against the Consumer Protection Regulation and Standards, and design remediation where gaps appear.
Regulatory engagement
We help prepare product submissions, respond to CBUAE queries and inspections, and manage complaints escalated to Sanadak.
Disputes and recovery
We advise on recovery strategy, settlements and defences in consumer credit disputes. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.
Explore our banking and finance practice and all our practices.
Checklist for decision-makers
- Is the entity providing the credit licensed by the CBUAE for this activity, and are any partners acting strictly as its agents?
- Does the product sit within the debt burden, loan size, tenor and fee limits that apply to it?
- If it is BNPL, does it meet the short-term credit definition, fee cap and exposure limits?
- Are pricing and fees free of compound interest and disclosed as an effective rate in Arabic and English?
- Is the Key Facts Statement provided before commitment, with a working cooling-off process?
- Are marketing, telemarketing and partner promotions approved and monitored?
- Are guarantees from individuals proportionate and properly documented?
- Do collection policies and agency contracts meet CBUAE conduct standards?
Rules for consumer finance in the UAE continue to develop under the 2025 law. Contact TRW & Co to review your product or partnership.
Frequently asked questions
01How much can a bank lend to an individual in the UAE?
Under CBUAE Regulation No. 29/2011, a personal loan is capped at 20 times the borrower's salary or total income with a maximum term of 48 months, and total monthly deductions for all loans and credit cards cannot exceed 50 per cent of gross salary and regular income. Lower limits apply where repayments run into retirement. Car loans are limited to 80 per cent of the vehicle's value over a maximum of 60 months. Banks may lend less based on their own risk assessment.
02Does a BNPL provider need a licence in the UAE?
Yes. Under the Finance Companies Regulation issued in September 2023, BNPL is short-term credit and may only be provided by licensed banks or finance companies, their agents, or restricted licence finance companies authorised by the CBUAE. Products must be interest-free, run for no more than 12 months, keep total fees within 30 per cent of the credit amount and respect per-customer exposure limits, with credit report checks above AED 5,000.
03What did the 2025 Central Bank law change for consumer lending?
Federal Decree-Law No. (6) of 2025 prohibits compound interest on customer credit facilities, requires clear disclosure of fees, terms and risks, and requires guarantees from individuals and sole proprietors to be proportionate to income and facility size, with claims lacking those guarantees inadmissible. It also expands licensing to platforms that facilitate financial services, mandates anti-fraud controls and provides for a unified complaints authority for banking and insurance.
04Can a fintech offer loans through an app without a licence?
Only if a licensed lender provides the credit and the fintech's role is structured so it does not itself carry on a licensed activity. Under the 2025 law, technology platforms that facilitate financial services can fall within the perimeter, and unlicensed activity is a criminal offence. The safest routes are to obtain an appropriate CBUAE licence or to operate as a properly documented agent or partner of a licensed bank or finance company.
05How do consumer complaints against lenders work?
The customer must first complain to the bank or finance company, which must have a complaints policy under the Consumer Protection Regulation. If the complaint is not resolved, the customer can escalate to Sanadak, the CBUAE's Ombudsman Unit, after 30 days. Sanadak covers individuals, sole proprietors and small businesses. The 2025 law also provides for a unified complaints authority and specialised committees for smaller-value disputes.
06What collection practices are not allowed?
Collection practices must be fair and must not harass, threaten or mislead borrowers. Lenders must identify customers in difficulty, offer help and tell delinquent borrowers about credit counselling. They remain responsible for collection agencies acting for them. Excessive calls, contact with employers or family, and threats of criminal action are high-risk practices. Clear agency standards, call recording and early hardship options reduce both regulatory and recovery risk.
Sources and official materials
- Federal Decree-Law No. (6) of 2025 (announcement) — New Central Bank law and borrower protections
- CBUAE Regulation No. 29/2011 on bank loans to individuals — Salary-linked limits, tenors and fee caps
- CBUAE Consumer Protection Regulation (Circular No. 8/2020) — Conduct, disclosure and complaints rules
- CBUAE Rulebook — Finance Companies Regulation and other rules
- Sanadak (CBUAE Ombudsman Unit) — Consumer complaints escalation
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
