Bankers said that banks currently prefer to buy customer debts based on granting new funds due to the consequences of the Corona virus, noting that the same demand for new personal loans is quieting until the market movement becomes clearer and the economic activity returns to what it was before the spread of the virus.
They added to «Emirates Today» that the banks provide citizens with a reduction in the interest rate, in order to achieve the advantage of reducing the monthly installment and reducing the total amount of interest on financing, noting that the interest in buying non-citizens ’debts is stable, and there has been no change since the beginning of this year, but There are accompanying offers to reduce transaction fees or the amount of insurance to motivate clients to transfer their loans.
Decline in loans
In detail, the personal loan official in one of the banks operating in the country, Mustafa Ahmed, said that the granting of new loans to customers has declined a lot, since last February, due to the repercussions of the spread of the "Corona virus", in addition to reducing some of the affected parties the number of employees or reducing their salaries, but he stressed in return The banks are active in attracting customers from other banks to buy their debts, and they offer citizens a reduction in the interest rate, in order to achieve the advantage of reducing the monthly installment, in addition to reducing the total interest amount on financing.
Ahmed indicated that the interest rate on the purchase of residents' debts has not changed since the beginning of this year, but that for citizens, it has decreased by approximately 1%, both in terms of personal or real estate financing.
For his part, the banker, Salam Abdel Karim, said that the demand for new financing has been largely calm, since last February, because of Corona, in addition to the fact that banks are conservative in granting the customer a new loan, unless they are sure that they are not affected by the current situation resulting On "Corona", explaining that in this case, the best option for banks becomes to buy customer debts, especially citizens, where low-price facilities are provided, with at least 1% of the banks in them, along with reduced transaction and insurance fees, and others.
In turn, the banking expert, Ahmed Youssef, commented that banks view the purchase of debts in times of crisis as less risky than granting a new loan, given that the previous bank did not grant its clients facilities without ascertaining their worthiness and ability to pay, indicating that the repercussions of the spread « Corona »created a reservation to grant new loans, whether for individuals or real estate companies, except after ensuring the sustainability of the borrower’s business, or the person’s continuing employment.
Youssef indicated that the debt transfer is often accompanied by the customer taking an additional financing amount, which means that the bank has won a new customer and provided low-risk financing.
He added that the demand for loans has decreased due to the disruption of business, since last February, but with the resumption of the economic movement, it is expected that the funds will revive again.
Youssef pointed out that banks usually offer less interest to citizens ’finances, due to the reduced risk of taking and not paying financing, or traveling outside the country, or other matters, but with the decline in demand in general, banks make offers to attract citizens who wish to transfer their debts.
Determine the interest rate
Bankers agreed that the current interest is to buy citizens ’debts
Personality is determined according to the value of the salary as follows:
- From 60 thousand dirhams or more, the interest rate is 2.85%.
- From 40 thousand to 59 thousand dirhams, it becomes 2.95%.
- From 30 thousand to 40 thousand dirhams 3.15%.
- From 20 thousand to 30 thousand dirhams, 3.45%.
The banking expert, Muhannad Awni, said that buying debts is linked to providing the bank with better benefits for the customer, whether at the level of the installment value or the interest rate, and pointed out that the past period witnessed declines in interest rates compared to what they were last year, he added: “So the customer is in his interest to It saves the value of the monthly installment and reduces the amount of financing.
The interest rate on citizens ’debts decreased by 1%, whether for personal or real estate financing.
The purchase of debts is linked to providing the bank with better benefits, whether at the premium or interest rate level.