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Take a loan, do not go to jail

Take a loan, do not go to jail

Sometimes, the simplest ideas are the best. Like, for instance, not going to prison after you take out a loan.

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February 24, 2011 1:52 by



Borrowing in the UAE is a scary business. If you take out a loan, build up a credit card bill, get car finance – basically do anything that puts you in debt, you’d better be sure you can pay it back. Because if you can’t, then there is a very good chance you will go to jail. It’s a long established legal and financial consequence of failing to repay credit, or even failing to honour a cheque.

That’s why, as the credit crunch brought the house of cards in Dubai tumbling down, the media was full of stories of expats abandoning their belongings and heading to the airport. Many who’d invested in property (either bought with a mortgage or committed to rent), who’d got finance to buy a car, or who had large credit card debts found themselves jobless, and that meant that inevitably they would soon be unable to make repayments. Rather than face prison, they fled, leaving everything they couldn’t carry behind. Officials will tell you that it was a popular media myth, but we all know it happened.

With this bitter lesson still a recent memory, people living and working in the UAE are nervous about taking on debt. We have reported several times about the failure of banks to provide credit to small businesses and entrepreneurs, but this is the other side of the coin: A lot of people are terrified of borrowing money in the country. Perhaps even more than we realize – maybe it’s not the banks’ fault at all, maybe they want to lend cash but no one wants to take it.



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3 Comments

  1. Anupama V. Chand on February 27, 2011 9:32 am

    What a wonderful idea! And isn’t it great that the UAE laws do not need to be altered at all, because that, as the writer said, is one long process. The only fear with this is if Gulf Finance was to suddenly change its mind from becoming benevolent neighbourhood-helper to malevolent vendetta-seeker! We hope this does not happen, but the truth is the insecurities about taking out loans in the UAE definitely remain too close to home. The number of hard-luck stories of people who’ve defaulted on credit card payments, or lost their entire life’s savings investing in property that never saw light of day, can hardly be forgotten in a hurry. I don’t even own a credit card in this town, and prefer to keep it that way, just to avoid getting into problems with the law. Escapist? Perhaps…..but better safe than sorry, especially when one’s family might have to bear the brunt when things go wrong…..
    Not to take away from the applause that Gulf Finance definitely deserves though, if it has honourable intentions!

     
  2. Clifford on February 27, 2011 10:03 am

    WILL THIS BE A NEW TRAP FOR PEOPLE, JUST LIKE WHAT UAE BANKS ARE DOING NOW. REALLY SCARED OF BANKS IN UAE.

     
  3. AP on February 28, 2011 6:08 am

    Not come accross anybody who is happy banking in Dubai. Any service or new product offered by the bank, is and always will be in the banks favour.

     

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