What’s the catch?

Abu Dhabi Commercial Bank has launched a loan for expatriates that gives them the chance to pay 50% of their installments for the first 12 months. Financial advisor Craig Holding gives his verdict on whether this is a good deal.

On face value the offer sounds great and would particularly appeal to people who have bad debt situations and who want to consolidate their debts together into one loan and then repay it over a certain period of time.

So if you had US$13,600 worth of credit card debt for example and you wanted to consolidate it then you could save yourself US$1,632 in repayments for the first year.

But a thing to remember is that you would have to pay that money back eventually - and the danger is that anyone who is already in debt would be tempted to spend that extra US$1,632 on more credit. These payments could become like a sleeping dragon that's going to come and bite you in one year's time when you have to make the usual payments. The most sensible way forward would be to put that US$1,632 into a bank account where it could sit there accumulating interest. That way after the first year when you do have to make the next repayments you would at least have some savings that you had built up so that you could still afford it.

By international standards the interest rate is pretty good at 10.5%.

But I would be interested to find out what would happen after the initial 12 month period and whether any interest you had accumulated on the US$1,632 worth of installments you didn't make in the first year would be added to the next set of payments.

It is important to find out whether that interest would be deferred because if so it could mean that your payments would be higher than expected in the next set of installments.

If you are only planning to be here for the next three years and you take a five-year loan there would be exit charges at the end of it which customers should definitely find out about before taking the loan.

As a short term solution to debt this is a good offer.

But customers should carefully read the terms and conditions of the loan before they sign anything.

For Further information contact:

Craig Holding

Mobile: 050-275-5851

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

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