Car Finance in Saudi Arabia: Monthly Installment and Cost of Financing
This calculator estimates your monthly installment, total amount payable, and cost of financing for a car, based on the car price, down payment, tenor, profit rate, and any final (balloon) payment. Car finance in the Kingdom is a Shariah-compliant Islamic product (Murabaha or Ijara). All figures here are estimates for planning purposes only and do not constitute a financing offer or a credit approval.
Murabaha vs Ijara: How Islamic Car Finance Works
Unlike a conventional interest-bearing loan, car finance in Saudi Arabia is based on one of two Shariah-compliant products:
- Murabaha (cost-plus sale): the bank buys the car and resells it to you at cost plus a known, pre-agreed profit margin. Ownership transfers to you immediately and you repay the price in fixed installments.
- Ijara (lease-to-own): the car remains in the bank's name during the contract while you pay rental installments, then ownership transfers to you at the end of the term via a token payment or gift.
In both products the total you will pay is known upfront; the key difference is the timing of ownership transfer and how the car is treated legally during financing. Choose the product that best fits your needs and the bank's terms.
How Is the Monthly Installment Calculated?
First, the financed amount = car price − down payment. Then the monthly installment is solved so that the present value of all payments (including any final balloon payment) equals the financed amount, using the declining-balance (annuity) formula:
Where: financed = the financed amount, balloon = the final payment, r = monthly profit rate (annual ÷ 12), n = number of months.
From this: total amount payable = down payment + (monthly installment × number of months) + final payment, and cost of financing = total amount payable − car price.
What Is a Final (Balloon) Payment?
A final (balloon) payment is a large lump sum deferred to the end of the financing term instead of being spread across the monthly installments. Including one lowers the monthly installment, because part of the financed amount is settled in a single payment at the end — but it usually raises the total cost of financing, since profit accrues on a larger balance for longer.
Before choosing a balloon payment, make sure you have a clear plan to settle it at the end — whether by paying cash, refinancing, or selling the car to cover the amount. Leave the field at zero in the calculator if you do not want a final payment.
Illustrative Table: Estimated Monthly Installment
The table below shows estimates for a SAR 100,000 car with a SAR 10,000 down payment (SAR 90,000 financed) over a 60-month tenor:
| Scenario | Est. Monthly Installment | Total Payable | Cost of Financing |
|---|---|---|---|
| 4% rate, no balloon | SAR 1,657 | SAR 109,449 | SAR 9,449 |
| 6% rate, no balloon | SAR 1,740 | SAR 114,397 | SAR 14,397 |
| 8% rate, no balloon | SAR 1,825 | SAR 119,493 | SAR 19,493 |
| 6% rate, SAR 20,000 balloon | SAR 1,453 | SAR 117,198 | SAR 17,198 |
Estimates for a SAR 100,000 car, SAR 10,000 down payment, 60-month tenor. Actual figures vary by bank, product, and whether the car is new or used.
Tips Before Financing a Car
- Maximize the down payment: every extra riyal upfront reduces the financed amount and lowers both the installment and the total cost of financing.
- Look at total cost, not just the installment: a low monthly payment can hide a higher financing cost from a longer tenor or a balloon payment — compare what you will actually pay in total.
- Ask about early settlement: early repayment is generally available; ask how the remaining balance is calculated and about any fees before you sign.
- Budget for car insurance: comprehensive insurance is usually required for financing, and its annual cost adds to your real monthly burden.
- Compare more than one offer: rates and terms vary between banks; the advertised rate may differ from the rate you are offered after your credit file is assessed.
Frequently Asked Questions
How is the monthly car finance installment calculated in Saudi Arabia?
The monthly installment is solved so that the present value of all payments equals the financed amount (car price minus down payment). The formula is: PMT = (financed − balloon × (1+r)^(−n)) × r / (1 − (1+r)^(−n)), where r is the monthly profit rate (annual ÷ 12) and n is the number of months. For example, a SAR 100,000 car with a SAR 10,000 down payment over 60 months at an indicative 6% annual rate gives a monthly installment of roughly SAR 1,740. This is an estimate and varies by bank and product.
What is the difference between Murabaha and Ijara car finance?
In Murabaha (cost-plus sale), the bank buys the car and sells it to you on installments at cost plus an agreed profit margin, and ownership transfers to you immediately. In Ijara (lease-to-own), the car stays in the bank's name throughout the contract while you pay rental installments, and ownership transfers to you at the end of the term via a token payment or gift. Both are Shariah-compliant financing products; the main difference is the timing of ownership transfer and how the car is treated legally during the financing period.
What is a final (balloon) payment and is it right for me?
A final or balloon payment is a large lump sum deferred to the end of the financing term instead of being spread across the monthly installments — it is optional in many products. Its advantage is that it lowers the monthly installment noticeably, but it means you face a large amount at the end that must be paid in one go, refinanced, or covered by selling the car. It suits buyers who want a lower monthly payment and have a clear plan for the final payment, and it usually increases the total cost of financing.
What is the maximum car finance tenor?
Most Saudi banks offer a tenor of up to 60 months (5 years), and some extend it to 72 months for certain products or new cars. A longer tenor lowers the monthly installment but raises the total cost of financing. Available tenors vary by bank and by whether the car is new or used.
Does the Debt Burden Ratio (DBR) rule apply to car finance?
Yes. The car installment counts toward your total monthly obligations governed by the Debt Burden Ratio (DBR) set by SAMA (Saudi Central Bank) at a maximum of 33% of total salary for Saudi nationals. So if your salary is SAR 10,000, the sum of all your monthly installments — including the car — must not exceed SAR 3,300. A car installment can therefore reduce the room you have for other financing.
What is the typical profit rate on car finance?
The profit rate on car finance in 2026 is roughly 4% to 10% per year, depending on the bank, the product, whether the car is new or used, and your credit profile. These figures are indicative only and change frequently; it is best to compare actual offers from more than one bank before committing, as the advertised rate may differ from the rate you are offered after your file is assessed.
Check Your Financing Capacity First
Before committing to car finance, check the room available under your Debt Burden Ratio with the Loan Eligibility Calculator — the car installment counts toward the 33% cap on your salary. To know your gross salary accurately, use the Saudi Salary Calculator.
Official sources
The figures and rules on this page are based on the following official references:
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