Seen Maximum rate that is presribed in Islamic loan letter of offer? think this is normal, and that rate will really inflate the bank selling price by a lot! But think on early settlement, they will give you back the rebate (Ibra') that will make bring the amount back to similar to conventional loan. i.e. if you pay the loan on time, no monthly/one time extra-payment/charges, with same loan amount and rates offered under conventional/islamic, you should be able to settle both loans with same amount of money (ignoring legal fees/penalties)

Just beware when reading a letter of offer by another bank that says "minimum presribed rate shall not be less than 3.xx% p.a. with daily rest". this 3.xx is consistent as the long term BLR - 2.x% offered (lowest over the duration of loan). So meaning when BLR goes under 5.55% as prevailing, the loan rate shall capped the minimum rate at 3.xx% and will not follow the drop in tandem.

So, need to read the letter of offer in detail, and make sure you understand all clauses before signing the dotted line.

As advised by many sifus, request for letter of offer earlier on to read in details. Dont do it over kopitiam as you tend to ignore the details and too excited to sign the document. Good luck, now I need to hunt for another loan provider.

my LA from UOB also have the " minimum prescribed rate", which is 3.35, BLR5.5-2.2 for 7xxk loan, end up i took others offer