Banks reduce interest on personal loans and transfer debts to the lowest level in 5 years

Banks operating in the country have reduced interest on loans, personal financing, and debt purchases to their lowest level in the last five years, whether for citizens or expatriates.

According to what was monitored by “Emirates Today”, through the official websites of these banks, this reduction is accompanied by other attractive offers, including postponing the payment of the first installment for a period of 180 days (i.e. 6 full months), and exemption from insurance fees, with a maximum transaction fee of 2,500 dirhams, in addition to welcome bonuses of up to 10 thousand dirhams.

According to the data published by these banks, the interest rate is determined according to the value of the salary that the customer receives. For example, for national customers, the interest starts from 2.02%, and reaches a maximum of 3.08%, depending on the salary segment.

As for the interest for non-citizen or expatriate customers, it starts from a fixed 2.6% for a salary of 70 thousand dirhams or more, and 2.7% for a salary from 40 thousand dirhams to 69 thousand dirhams, while it reaches 3.01% for a salary from 25 thousand dirhams to 39 thousand dirhams, and 3.8% for a salary from 12 thousand dirhams to 24 thousand dirhams. And 4.5% for the salary from 8,000 dirhams to 11,000 dirhams.

For his part, the banker, Tamer Abu Bakr, said, “A large number of banks are offering various offers during this period, but the most prominent one is reducing the interest on new personal loans and purchasing existing debts to their lowest level in the last five years, if not more than that, which contributes greatly to reducing the value of the monthly installment for customers, whether they are citizens or expatriates.”

Abu Bakr added, “Banks offer these offers periodically, with the advent of summer and vacations, to attract the largest number of new customers and utilize the liquidity they possess, in addition to the fact that the second half of the year is usually more active in preparation for good closings at the budget level.”

He continued: “There is also a postponement of about six or seven months before paying the first financing installment, according to each bank’s policy, which gives customers a period of relief from the burden of debt, in addition to an exemption from insurance fees, with a maximum transaction fee of 2,500 dirhams.”

He said: “However, the customer must ask about all the details related to the interest rate, and how much is it worth as a value over the loan? How is it calculated and deducted? And other things.”

In turn, banking expert, Ahmed Youssef, explained, “Banks usually determine the interest rate according to the customer’s salary and credit rating, but it is very important for the customer to understand how the interest value is distributed over the financing installments, and does it change after a period or is it fixed?” Is it distributed equally over the number of installments, or do banks deduct the largest percentage of it in the first repayment period, which means it is difficult or futile to move to another bank and start repaying the full loan amount? And so on.

Youssef added, “The customer’s financial culture is very important, before considering any offer presented to him,” pointing out that “banks offer promotional offers from time to time aimed at attracting new customers, but in return there are profit margins that cannot be lowered, and the customer must ask about all the details before requesting financing or signing contracts.”