Many bank clients in the UAE have raised concerns about the need to extend the repayment terms for loans, established for four years for personal loans and five years for auto loans, according to the guidelines for personal loans adopted by the Central Bank in 2011. According to the presented data, the four-year period or 48 months for personal loans exerts significant pressure on clients, especially in the case of auto loans, particularly if the value of the car is high.
However, many borrowers argue that it would be reasonable to increase the repayment term by another two or three years, allowing the client to choose a more convenient schedule, even if this leads to an increased interest rate on the loan. They emphasize the need to keep the loan amount unchanged, but present the possibility of having variable repayments, for example, seven years, to alleviate financial burdens and increase the remaining salary part for less affluent citizens.
Bank experts also suggest adapting loan conditions to take into account the financial capabilities of borrowers to avoid financial problems in the future. Unplanned loan obligations for an extended term may become a serious issue for clients.
Experts agree that extending the repayment terms can have both positive and negative consequences. On one hand, it reduces monthly repayments, but on the other hand, it can lead to increased overall repayments over terms. Overall, presenting the client with the possibility of choosing a longer repayment period for personal loans allows each to address their situation considering their needs.
Specialists also find it necessary to reconsider the conditions of auto loans, especially for expensive cars, allowing an extension of the term to 6-7 years, taking into account a mandatory payment of 30% of the car’s value, which allows reducing the financial burden on the borrower. All proposals aim to ease the financial situation of clients and prevent future financial difficulties.
Many bank employees call for more flexible loan terms, taking into account the individual financial circumstances of each client, thus representing the necessary support and care for clients throughout the entire loan repayment period.
