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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.
February 24, 2011 1:52 by Samuel Potter
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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