Abu Dhabi, UAEThursday 26 November 2020

How to restructure your UAE loans when debt pile reaches Dh60,000

Reader with high debts and a low monthly salary struggles to get help from the banks.

I need some advice to help me to consolidate my credit cards and loans into one monthly instalment. I have two loans and three credit card payments due every month that are very difficult for me to pay. Also the interest rates are very high. I have tried many banks, but they have said that I am not eligible for this kind of consolidation settlement. My monthly salary is Dh5,000 and my total outstanding debt is Dh60,000. MU, UAE

The expert advice

Ambareen Musa, founder and chief executive of Souqalmal.com

Consolidating your debts, or refinancing as the banks also like to call it, allows you to merge all your debts into one loan. So whether it is outstanding car or personal loans, maxed out credit cards or an overdraft, a bank will offer to merge these debts into one balance that you can then pay off with them. There are many banks in the UAE that have loans specifically set up for consolidating your debts such as Commercial Bank of Dubai and Emirates NBD. However, to get a loan in the UAE most banks will ask for a minimum salary of Dh5,000 and will require your company to be listed with them. There are very few banks that will provide you with a loan to consolidate your debts without being listed, but in this case the eligibility criteria is generally higher – such as that your minimum salary be Dh8,000. The best way forward is to identify the banks that would provide a loan without your company being listed (if you work for a company that you know is not on the list of many banks) and discuss their eligibility criteria as it is pn a case-to-case basis. If there is no way to consolidate your debts and you are having issues making all of your repayments, I would talk to your bank and discuss ways to restructure your repayments with them. It is generally a good idea to pay off your most expensive loans first then work your way down. It would also be a good idea for you to take another look at your finances and see where you can make some extra savings, for example by grocery shopping on discount days, spending less on entertainment and so forth. You will be surprised how you can find small ways to cut back, and when you add it all up, it can become a significant amount.

The reader’s advice

Faisal Mohammed, Dubai

I got into a difficult financial situation three years ago and was rescued by a consolidation loan from a bank different to my own. They paid off all my creditors one by one and gathered all the debts into one single four-year loan that I could afford to repay. The benefit of this was that I had lower monthly repayments and a lower interest rate than before. The downside is that three years on, I am still making those repayments with one more year to go. Plus I had to switch banks to the loan provider to ensure I got the best possible interest rate. The difference between me and you is that I earn a much higher salary, which made it easier for me to secure a consolidation loan. With so many banks putting minimum salary thresholds on their loans, you may struggle. Perhaps you should turn to your own bank first as it is in their interest to help you manage your finances better.

The next money clinic:

In 2008, my husband and I invested in some off-plan hotel serviced apartments with a major developer based in Abu Dhabi. Unfortunately the developer decided not to go ahead with the hotel serviced apartments and went ahead building normal residential towers instead. The developer would not offer compensation or any refund to us so we had no choice but to take legal action. Four years ago we won our case in the Abu Dhabi courts, which then gave an execution order for the developer to pay back our money. Four years on, we still have not received a dime and the developer is still operating and has now finished building some of these residential towers on Al Reem island. Our lawyer based in Abu Dhabi is no longer pursuing the matter, and they do not reply to our phone calls or emails. I have been in touch with others in a similar situation who also won their court case but have not received any money back either. The amount of money owed to us is substantial. What can I do now to enforce the court’s execution order? MD, Abu Dhabi

Every three weeks The National features a reader’s personal finance problem. If you have an issue or would like to suggest a solution for another’s reader’s concern, write to pf@thenational.ae

The advice provided in our columns does not constitute legal advice and is provided for information only.

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Updated: August 29, 2014 04:00 AM

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