What’s the catch?

Financial advisor Sandi Saksena analyses a deal from ABN Amro offering free travel vouchers to new loan customers.

One of the ways for banks to boost their loan portfolio is to offer these types of incentives to customers.

This loan offer has been launched as a marketing ploy because this is the time people are thinking about booking their summer holidays.

The offer is only valid until 21st of June - so they are pushing people to take the loan as soon as possible because business in the summer months, when people tend to leave the country, is much slower.

I myself went to the bank to find out more about the conditions of the loan. They told me that in order to be eligible for the loan customers need a minimum salary of AED3000 and that the maximum loan amount is over AED100,000.

They told me though that the amount of the loan you are given is in proportion to your salary.

So if your salary is AED3000 then the maximum loan amount you can have is AED18,000 which is not bad at all.

I then asked about the interest rates - which turned out to be a lot more expensive than a normal personal loan at around 12% on a reducing balance basis.

Meanwhile the maximum value of the travel vouchers you can get is AED1000.

And that would be on a loan of AED100,000.

So what you are actually getting is not even 1% of the value of the loan.

And if you are going to pay something like 12.5% interest you need to ask yourself how is this travel voucher really going to make a difference to your bottom line?

The bank also informed me that as this is not a salary transfer loan they would require post dated cheques for each monthly payment - plus a cheque for the entire amount of the loan.

This is as a safety measure for the bank but it's a very big risk for me as a customer and it's something people should consider before taking out a non-salary transfer loan like this.

For more information, contact:

Sandi Saksena
Email: This email address is being protected from spam bots, you need Javascript enabled to view it

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