11 January, 2008

How not to be ripped-off while taking a loan

Usually, for every new entrant in Dubai - i.e. one who has got an employment, got an accomodation and a bank account - applying for a personal / car loan is the 2nd most important step towards settling down.

All the banks - esp. the MNC banks - know about this quite as well , and are sitting there just to grab you to make a kill! Most often the rate is the currently applicable rate in the country - but offers / add-ons / ripp-offs are all dependent upon who proves the smartest - the bank or you.

Is there any way you can help yourself?
YES! Here's how! You can also participate in a loan satisfaction poll.


i*maginate said...

LOL @ The post title


surely ya mean "ripped off" :P

BuJ said...

lol imaginate..

btw, i might also add that if you're smart then there's a smaller chance of being ripped-off


CG said...

I have never been 'ripped' before.

Guess I am super-smart;)

Kyle said...

In addition to loans, I get numerous offers for credit cards too.

Sometimes, I feel I'm running out of excuses in these all-too-legal scams.

What is it with banks here and their obsession to dump credit cards and offer loans to people?

Keefieboy said...

kyle: 'cos they can jail you if you default :-)

i*maginate said...

*2 bad, for what they call *ripp-offs* (as sppelt by shansenta)

Kyle said...

keefieboy: Thanks for the revelation. I was kinda wondering there had to some sort of a catch to these loan & card gimmicks :)

Jokes apart, guys.

Say I stack up on my purchases, default, get myself hauled to prison, serve my time. Then what?

In the end, who covers my bill? Insurance? For sure, it won't be me as I've already paid my debt in terms of a free stay at Disneyland with the General Population.

BCA said...

To Kyle...If I am not wrong, the length of your stay in prison is proportional to the time you take to repay the said loan...

Now, forget about what I just told you. Of course, it is very profitable for the banks to give out all these loans (see also subprime crisis in the US..hoho).

It is simple statistics, as long as the number of defaulters is below a certain percentage of the the total portfolio, the bank will make a hefty profit. And don't forget that the interest rate on credit cards and personal loan is very high e.g. a credit card that charges you 2.2% per month that is over 24% PER ANNUM !!!!!!! This profit largely covers for the loans that default !!!

I, personally, would recommend anybody to always settle their credit cards in full...it simply does not make sense to only partially settle your credit card (except in emergency cases) over an extended period of time.

As a banker, I am amazed at the amount of people (mostly educated people in managerial positions) who keep huge unsettled credit bills for months in a row

...this only makes sense for business people who can generate a higher profit rate than the interest rate the bank charges them...

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