Loan Settlement / Closure Letter
Used by borrowers to request early settlement and closure of a personal loan, car loan, or mortgage. UAE banks require a formal written request for loan closure and final settlement calculation.
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What is Loan Settlement / Closure Letter?
Generate a loan settlement letter for early closure of personal loan, car loan, or mortgage in UAE. Request final settlement amount and account closure.
When do you need it?
Used by borrowers to request early settlement and closure of a personal loan, car loan, or mortgage. UAE banks require a formal written request for loan closure and final settlement calculation.
What should this document include?
- • Bank Name
- • Branch Name
- • Borrower Name
- • Borrower Emirates ID
- • Loan Account Number
- • Loan Type
- • Original Loan Amount (AED)
- • Loan Start Date
- • Loan Tenure (months)
- • Outstanding Amount (AED)
- • Intended Settlement Date
- • Settlement Mode
- • Borrower Phone
- • Borrower Email
- • Letter Date
How to prepare and submit this document
- 1 Request the final settlement figure. Call your bank or visit a branch to get the exact early settlement amount. This includes the outstanding principal, accrued interest to the settlement date, and the early settlement fee (capped at 1% of the outstanding balance by CBUAE).
- 2 Check your loan agreement for lock-in periods. Some UAE banks charge higher fees or prohibit early settlement within the first 6–12 months. Review your loan agreement before submitting the request to avoid surprises.
- 3 Submit the letter with your Emirates ID. Visit the bank branch with the completed letter and your Emirates ID. The bank will verify your identity and process the request — most banks take 3–5 business days to prepare the final settlement statement.
- 4 Pay the settlement amount and get clearance. Transfer the exact settlement amount to the loan account. Once cleared, request a liability letter and a no-liability certificate from the bank. Keep these for at least 5 years — you may need them for future visa or loan applications.
Common mistakes that get this document rejected
- ✕ Assuming early settlement is always free — CBUAE allows banks to charge up to 1% of the outstanding balance (capped at AED 10,000) as an early settlement fee
- ✕ Not requesting the no-liability certificate — without it, the loan may still appear on your credit report with Al Etihad Credit Bureau
- ✕ Paying an estimated amount instead of the exact settlement figure — underpayment leaves the loan technically open and accrues interest
- ✕ Closing the bank account before the loan closure is fully processed — this can delay the final settlement and damage your credit score
Frequently asked questions
How much is the early settlement fee in the UAE?
CBUAE caps the early settlement fee at 1% of the outstanding loan balance, with a maximum of AED 10,000. Some banks waive this fee for customers with good payment history — ask before submitting the request.
Will early settlement affect my credit score?
Early settlement itself does not negatively affect your Al Etihad Credit Bureau score. However, closing a long-standing loan reduces your credit history length, which can have a minor temporary impact. The benefit of being debt-free usually outweighs this.
Can I settle a loan if I am leaving the UAE permanently?
Yes, and you should. UAE banks can freeze your account and report you to immigration if you leave with outstanding debt. Settle all loans, get the no-liability certificate, and close your accounts before departure.