The 36th cheque, and supposedly the last, for our car loan just got debited in our bank account, but I'm taking to the back seat the full sigh of relief, since we have yet to know the additional $ we need to shell out for the bank's interest rate adjustment.
During the economic boom, Dubai's banks race to offer loans -- "light" requirements at low interests rates (our car loan was at 3.99% per annum). Many expats received loans. This spelled trouble for the banks when recession came in the picture early last year. As expats lose their jobs, they opted to leave, including their unpaid liabilities. For car loans, news had it that cars in couple of thousands had been left in the airport, in malls and other car parks. I'm not really sure of the impact to the banks this has, apart from obvious liquidity issues. I mean, do banks run to their insurers?
Now for us, we signed with a new local commercial bank then. At 3.99%, they offered the lowest annual rate against 4.25% to 5% of other established banks. We thought we were practical. But halfway thru our loan period, we received a notice that for the remaining amount, the rate will be charged at 8.5% ! Their reason is that they need to cope up with the challenge of the times. So, ah ok!
Some of our lessons:
1) Check banks with history of changing agreed terms
2) Read and understand all terms and conditions fully. Be careful of lines to the effect of "... the bank reserves the right to...". Sometimes, they give you a sentence with hidden details. It might just say " ... as per bank's terms and conditions" which one would be blind of until he/ she complains and ends up being told "... but you signed acceptance..."
During the economic boom, Dubai's banks race to offer loans -- "light" requirements at low interests rates (our car loan was at 3.99% per annum). Many expats received loans. This spelled trouble for the banks when recession came in the picture early last year. As expats lose their jobs, they opted to leave, including their unpaid liabilities. For car loans, news had it that cars in couple of thousands had been left in the airport, in malls and other car parks. I'm not really sure of the impact to the banks this has, apart from obvious liquidity issues. I mean, do banks run to their insurers?
Now for us, we signed with a new local commercial bank then. At 3.99%, they offered the lowest annual rate against 4.25% to 5% of other established banks. We thought we were practical. But halfway thru our loan period, we received a notice that for the remaining amount, the rate will be charged at 8.5% ! Their reason is that they need to cope up with the challenge of the times. So, ah ok!
Some of our lessons:
1) Check banks with history of changing agreed terms
2) Read and understand all terms and conditions fully. Be careful of lines to the effect of "... the bank reserves the right to...". Sometimes, they give you a sentence with hidden details. It might just say " ... as per bank's terms and conditions" which one would be blind of until he/ she complains and ends up being told "... but you signed acceptance..."
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| That sign used to say "Baby On Board" |
