8 of 10 UAE residents are in debt; 25% have defaulted


Dubai, Sep 7 (Emirates 247) : Almost 8 out of 10 people in the UAE are indebted to their banks, a new survey reveals, with more than a quarter of respondents admitting to missing a payment or making a late payment on their existing loans.

Around 77 per cent of respondents confirmed that they have some form of debt with UAE banks, according to a survey carried out recently by a UAE-based finance comparison website.

More than half of the respondents of the online poll run by compareit4me.com said they have a credit card loan (54.7 per cent), followed by personal loans (43.6 per cent), car loans (12.6 per cent) and mortgages (4.1 per cent).

Strikingly, more than a quarter of the respondents admitted to missing a payment or making a late payment on their existing loans. The poll reveals that that 5.8 per cent of the respondents have ‘often defaulted’ on their loans, while 19.3 per cent have missed or made a late payment once or twice in the last 12 months.

The survey was conducted between July and August 2014.

The UAE’s official credit bureau, Al Etihad Credit Bureau had announced last month that it will begin issuing consumer credit reports to banks from this month onwards.

Credit reports of UAE residents will include records about consumers’ debt levels, financial obligations, credit payments, history of default payments and late payments, it said.

“The results of this year’s financial survey are quite concerning as more than one in four of those polled also described their monthly debt repayments as ‘stressful’,” said Jon Richards, CEO of compareit4me.com.

The survey reflects the steady uptrend in consumer lending as UAE banks continue their recovery from the 2008 global slowdown. Global credit ratings agency Standard & Poor’s forecast a 10 to 12 per cent nominal growth in UAE personal credit in 2014 and 2015.

About 5.2 million credit facilities of individuals residing in the UAE have been added to the Al Etihad Credit Bureau’s credit reporting system. This represents 97 per cent of the total credit facilities provided by local and international banks and financial institutions operating within the UAE, including credit card and loans.

“Customers will have access to their credit reports through our soon-to-be-launched customer service centres,” said Marwan Ahmad Lutfi, CEO of Al Etihad Credit Bureau.

“The issuance of credit reports to banks and financial institutions is an important step in reducing credit losses resulting from non-performing loans and will in turn help individuals and companies to have a deeper understanding of their financial obligations and debt levels,” he added.

For those whose debt levels may be approaching the unmanageable levels, experts suggest consolidating your debt and exploring the refinancing option to make financial obligations more manageable. “Consumers need to be proactive when it comes to managing debt if financial obligations become a struggle,” Richards said. “Consumers need to act fast to find more manageable options.”

“Refinancing debts should be the first thing people look into: as the banks compete with each other, rates inevitably come down leading to cheaper credit,” he says.

“If you have a loan which is over 12-months old, it is likely you will be able to get a better rate today, so make sure you look into it. Consumers also need to look at consolidating debts wherever possible, such as credit cards for example which have a much higher interest rate than a personal loan. This alone could save you thousands, particularly if you only make the minimum payment each month,” says Richards.

  

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Comment on this article

  • harish, RAk

    Tue, Sep 09 2014

    Fact is Gulf entry is one way, we all feel will go back and settle in india next year, but after 10-20 year still in same place !

    DisAgree Agree [4] Reply Report Abuse

  • Alwyn, mangalore

    Mon, Sep 08 2014

    Hi there... WE TOLD YOU ONLY OUR DEBTS....NOT DEPOSITS, INVESTMENTS....Ha...Ha....Ha...

    DisAgree [3] Agree [4] Reply Report Abuse

  • AL, Mangalore

    Mon, Sep 08 2014

    Jossey, I am not disputing the fact that you might have worked in Dubai. The bottomline is water is everywhere. You should know how to swim. Your bad experience here does not mean everyone is having a bad time in Dubai.

    DisAgree [4] Agree [10] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Mon, Sep 08 2014

    AL, You are right, only 2 out of 10 people have managed to stay afloat, rest have all ...

    DisAgree [7] Agree [5] Reply Report Abuse

  • jeetendra hegde, mumbai

    Mon, Sep 08 2014

    Indians are indians,,,,a big panganaama for UAE banks like our mallya.

    DisAgree Agree [6] Reply Report Abuse

  • Wilfred Rego, Siddakatte / Oman

    Mon, Sep 08 2014

    If you clearly read the article , the figures are not alarming but it is giving bad sings for the banks . If you have debted first you should have clear planning while spending the saving to repay the loan. Suppose you are having loan then you have cut down your expenses to meet the monthly EMI payments. The article says that 25% defaulted may be due to job lost or due ti inflation and over spending . But there is way forward in every bank . There will be few individuals who may be greedy about the investment in properties. As the latest figures in news papers there are lakh of Housing units unsold due to high rates of houses and no buyers.The new real estate projects in Mumbai delayed due to poor absorption. The real estate is over saturated in everywhere in India.

    DisAgree Agree [3] Reply Report Abuse

  • Nithin, Mangalore/SA

    Mon, Sep 08 2014

    @AL [ Mangalore ].., You have rightly said that Interest rates for Loans overseas say UAE 2.75-3.5 and in US less than 2%.., And what has happened today People Overseas have taken loans and kept buying Property in South Kanara .., Look at the rise in Price of Real estate in the last decade it has Sky rocketed .., Has the growth been substantial in economy in Mangalore been the same ..!!!, How many industries or IT companies have come to MLR.., Lately Real estate has become NO 1 Business in South Kanara.., have NO clue as to were this heading to...

    DisAgree [2] Agree [9] Reply Report Abuse

  • AL, Mangalore

    Mon, Sep 08 2014

    Hi Nitin, I know it's not a good sign for people buying property in Mangalore but then as long as the demand exists the high prices are there to stay..wont get any better.

    DisAgree [2] Agree [5] Reply Report Abuse

  • Santan Mascarenhas, Kinnigoil/Mumbai

    Mon, Sep 08 2014

    Land is an item, created by God and it can not be produced. As long as there is population increase, in the long run, the best investment on earth is earth.

    DisAgree [5] Agree [6] Reply Report Abuse

  • Rakesh Colaco, Mangalore

    Mon, Sep 08 2014

    A lot of people have borrowed money from UAE banks to buy properties in Mangalore / Udupi. They have paid the initial 2 installments but defaulted later. Many builders are struggling because of this fact and many may run away with the huge interest burden.Many builders in Mangalore are even borrowing from private parties to complete their buildings.There is also a glut of unsold flats in Mangalore.

    DisAgree [1] Agree [7] Reply Report Abuse

  • Ralph Pinto, Mangalore

    Mon, Sep 08 2014

    The tendency to over spend is in the UAE. But Indians in Kuwait / Qatar and Saudi Arabia have a better chance to save money because there is no social life.

    DisAgree [1] Agree [8] Reply Report Abuse

  • Anil, Mangalore

    Mon, Sep 08 2014

    Real estate in Mangalore is over priced. Mainly because of the NRI s and brokers. There are no businesses like Mumbai and Bangalore. Only educational institutions nd Medical colleges which are looting the public. Definitely a bubble which is slowly leaking. Beware buyers

    DisAgree Agree [8] Reply Report Abuse

  • vivek, herebile / abudhabi

    Mon, Sep 08 2014

    well...Credit card is not so bad ...if some one know basic mathematics...scrap hidden charges(trap)...attack it before it attack you(pay more than minimum)...try to keep debit near to gratuity money...convert it as loan amount if unmanageable...for certain nationality escaping is final option..but not for Indians (they don't do it thou)..i hate insane comments of crooked people...there is no such person who lived without borrowing...( India or Canada )

    DisAgree [2] Agree [5] Reply Report Abuse

  • AL, Mangalore

    Mon, Sep 08 2014

    Some of the "frogs in the well" have come out croaking just by reading an article which is based on a sample of a few hundred UAE respondents. if you frogs care to know, this sample is based on all expats based in UAE. Not just Indians, not just south Indians, & certainly not just Mangaloreans!

    Some of the guys here who have referred to mangaloreans in Dubai as FEKU (god knows what it means)suggest that they are so jealous of our lifestyle that they have generalized everyone to be in default.

    There is bad news for you "frogs". Most mangaloreans are smart and are doing very well here in Dubai and else where. We have prospered thru our hardwork, intelligence and that clearly upsets you frogs.

    The frogs are envious of our success , so keep croaking..

    DisAgree [10] Agree [14] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Mon, Sep 08 2014

    AL or whatever, Daijee should us many pictures of Mangaloren families committing suicide ...

    DisAgree [9] Agree [11] Reply Report Abuse

  • AL, Mangalore

    Mon, Sep 08 2014

    jossey or whatever, then you should know better that there have been mass suicides committed by Mangaloreans living in mangalore too. Read properly before you comment and show the world your ignorance.

    DisAgree [11] Agree [14] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Mon, Sep 08 2014

    AL, I have worked in Dubai too and I know exactly how deep water you guys are in ...

    DisAgree [5] Agree [9] Report Abuse

  • vinayak, mangalore / dubai

    Mon, Sep 08 2014

    Main reason for a person getting in debt is the salary scale. Rents gets hiked up on yearly basis as there is no control. But raise is income level is just less than 1%. In such case, a person is forced to borrow money thru' his sources to make ends meet. Expats never get benefitted in any kind as there is no rules laid down by govt towards the private companies for increase in salary in line with the cost of living. In such case, a person having a family in UAE shall never be able to clear his debts. In the past rents were reasonable and there was hardly any pinch one could feel. With current level of expenses, it is very difficult for a person to make his living, though his earning is 25K a month. Housing rent, school fees, W&E are the major part which takes all your income.

    DisAgree Agree [6] Reply Report Abuse

  • stan, dubai

    Mon, Sep 08 2014

    You can spot them prowling the streets of Dubai City's wealthy enclaves in sports cars. The guys wear designer shirts. Lattest mobiles/ laptops. The women have expensive bags and sunglasses. Dubai got fine roads but accidents are more. But in this world 1.01-Understand Responsible Earning, Spending, Saving and Borrowing. It is easy to borrow and spend. In Dubai it is easy to borrow i.e. credit cards, Bank loans,Car loans etc. These people borrow without planning how to repay it back. So 8 of 10 UAE residents are in debt 25% have defaulted

    DisAgree [1] Agree [8] Reply Report Abuse

  • Ronnie, Kinnigoli/Canada

    Mon, Sep 08 2014

    Debt is one person's liability, but another person's asset. If you pay anything above 12% as interest on a depreciating commodity then you are doomed. Rather go to bed with out dinner than to rise in debt.

    DisAgree [1] Agree [17] Reply Report Abuse

  • raghavendra m k, mumbai maharashtra

    Mon, Sep 08 2014

    Life style in UAE of migrated employees and decreased salary package, regular remittance to their family back in india, more rent are few reasons for using the credit cards and other types of personal loan from banks.Only life style should be changed according to the income.otherwise frustration, depression, blood pressure and diabetes will be the consequence. Since problems are already caused ., regular yoga ,meditation to keep the mind cool and curb the expenses of materialist use.

    DisAgree [1] Agree [19] Reply Report Abuse

  • vivek, hirebile / abu dhabi

    Mon, Sep 08 2014

    Dear Melwyn Pereira,you came here During 80's and the Survey is about 2014, its big generation Gap , Almost 8 out of 10 people are indebted means its a grave problem, there are Suicides there are Family separation, Try to spread your legs within your mattress not only old saying it is OLD fashioned saying....lot of things involved in this present miserable situation, Government policy has changed, bank's are cheating(easy money), peoples living style has changed, salary has lessened..Emiratisation ( employing locals)..rent and food price is reached sky.technology taken over man power( less jobs)..now the only option is(like past),send family back home, stay 15 person's in a room,go on leave every 2 years....then on will have what called SAVING..

    DisAgree [1] Agree [16] Reply Report Abuse

  • Rita, Germany

    Mon, Sep 08 2014

    @ Melwin Periera Canada,I would not say it is a shame to be in debt.Everyone doesnt earn the same as the other.sometimes Situation arises that either one falls sick or from home one Needs Money (many times without knowing how and what one earns).Situation goes out of control.Of course one should have their earnings and giveout in blick.Better Keep a household book and note everyday what you bring in and give out whatever it is.End of the month you know the Balance.You gulfies are lucky to buy things without sales tax.It is better to buy with cash than cc.Then you dont loose the overlook.with cc you simply cant makeout what extent you go.we here have to pay for Dispo credit upto 12-18% .upto one to two months salary you can draw .I think in gulf many low earning People require Money when they go to India on Holidays.Sometimes I wonder in India how come These People throw about Money ,and what they are earning.but anyway gulf Country is now not attractive as some years before I heard.so dears dont loose the overlook to your earnings.good days are gone.

    DisAgree [1] Agree [6] Reply Report Abuse

  • Raj, Udupi

    Mon, Sep 08 2014

    Its sad ..After working hard you have to live in debt. Gone are the days...
    people use to enjoy Brut. If your children use Cartier..You pay for it.

    DisAgree [1] Agree [7] Reply Report Abuse

  • vellano1, Mumbai

    Mon, Sep 08 2014

    Bokka Oorug battnda, bhaari raisaver maare!! dappa dappa chain, rayban glass, jeans daane!! dirhams, credit cards, scent perfume daaane!! ...maata "FEKU nakulu!!

    I am always of the opinion that this middle east bubble will burst soon!! OIL mugiyaad, bokka tooka! -)

    DisAgree [21] Agree [10] Reply Report Abuse

  • Jamal, Mangalore/UAE

    Sun, Sep 07 2014

    How true it is. Credit card is a trap once you are in you will not get out for whole of your life. You only end up paying and paying more. People should be very careful while dealing with finance. Easy to give advise but hard to follow.

    DisAgree [1] Agree [9] Reply Report Abuse

  • AL, Mangalore

    Sun, Sep 07 2014

    I understand that you can fall into trouble by spending more than you can afford.. this is true in any country not only UAE.

    However, with decent knowledge of finance one can maximize his or her wealth with the proper use of debt.

    Also, a financially literate person would know that the cost of debt is cheaper than the cost of equity. Not all debt is bad.

    Example, a personal loan in Dubai would cost me somewhere in the region of 2.75%-3.5% effective interest (including insurance, processing fee etc). Now , I can utilize this money to put a down payment on a house in Dubai or in India and have an asset against this loan ..so to speak.

    It's a different thing, If I were to blow this money on night clubs or designer wear or even buy shares in Pakistan. That can happen with one's own funds too. One has to be very stupid to do that.

    One has to know how much one can leverage himself/herself.

    I have made money this way and have used my knowledge to do this.

    To ignorant people who say debt is bad, I would say..you can go take a walk!

    No offence given , none taken..

    DisAgree [2] Agree [10] Reply Report Abuse

  • Evans Christopher Sumitra, Udupi, Dubai, New York, USA.

    Sun, Sep 07 2014

    The above fact is true. People coming to UAE and other gulf countries are working with low wages. They have to make a living paying high rents and most of them want to buy a dream house in India. For that they have to either take a loan from the bank or credit card to pay off the mortgage. This interest adds up to your income which any bank will not leave you without paying them back on time as the interest will increase with the late payment. There are so many reasons.

    DisAgree Agree [6] Reply Report Abuse

  • vellano1, Mumbai

    Sun, Sep 07 2014

    Jossey, u mean all "FEKU's" are in Dubai.. possible? :-D when will the "dubai bubble burst"?

    DisAgree [5] Agree [3] Reply Report Abuse

  • Salvador Pereira, Mangalore / Dubai

    Sun, Sep 07 2014

    This survey may be taken from the people who are below 35 years. Otherwise most of the older generation lived and living without debts, by sharing and caring and earned substantial savings for the rest of life to enjoy.

    DisAgree Agree [4] Reply Report Abuse

  • Vasant Raj, Mangalore / Abudhabi

    Sun, Sep 07 2014

    Dear Friends, Emirates Islamic Credit Card is very dangerous than any, other Credit Cards. Last week i closed my C.C with EIB. During the payment they are mum... once i paid all my dues, they are saying bloody 0.88 fills still pending, you pay 10.00 Dhs, rest change you will get after 45 days..i said I will pay the dues, rest you keep the change..please don't go for E I B...This is my experience...last week..

    DisAgree Agree [8] Reply Report Abuse

  • karan, katapadi/Dubai

    Sun, Sep 07 2014

    I think the banks are making more profits through credit cards and people loose money through credit card. Generally, who doesn't have money problem ? Banks will offer credit cards Free for life and offer many other benefits and discounts and sales guys convince people to apply card even if you are not interested. Then many a times people buy gold or do shopping though credit card and end of paying 5% payment. Many people are not ware that paying 5% it takes more than 11 years to repay your credit card loan.

    DisAgree [1] Agree [16] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sun, Sep 07 2014

    Blame it all on the UAE residents FEKU life styles in Mangalore ...

    DisAgree [7] Agree [9] Reply Report Abuse

  • Lily Grace, Mangalore/Mumbai/Dubai

    Sun, Sep 07 2014

    Many times its become a necessity to take a loan from the bank. But its very much important to prepare a plan and be serious how one can return to the bank. If this is worked out, then the person will pay in time as per the installments. Its really a shame to be in debt in a country like Dubai where there is no tax. Learn and follow a budgeted life so that you are able to manage your expenses. Banks will give you the loan and they earn money on your loan. You in turn repay nearly double. Its not worth.

    DisAgree [3] Agree [19] Reply Report Abuse

  • satya, mangalore

    Sun, Sep 07 2014

    By credit cards and loans bank make lot of money(profits).
    People buy both...but they fall into trouble when they have CC in their hands and some guys live in these credit and loan.They keep on doing the turn over kind of a thing.They act as if they doesnt have any problem in life.But they fool everyone by having lot of credit.I know some people doesnt know to manage their personal finances and they want to live their life in a very best way.Some want to show off and do all the enjoyment...this will put them into big time trouble.I have seen some people buying things in Dubai using credit card even as low as Aed10 they use cc's.
    Some doesnt even discuss these things with their wife's n some discuss and they doesnt even inform howmuch they have to pay back and they doesnt even tel wives anything they buy ask the wife to keep quite n say everything they will handle and later they cry with their wives to save them.There are lot of people commitment is wrong.When they are with their friends they pay their bills too.Instead of doing this they can have a dutch system.
    People dont plan ....they should have proper investment plans such as life insurance coverage by paying small amount,And small investment plans which will give them reasonable returns to live their retirement life as well as they can give good education to their kids.Instead people take loans to buy big flats and some take property...they doesnt know when they have critical illness they have to sell all these properties on half price.
    People the cc's and loans if you use it properly and make the payment properly definitely it will be a big help.But some unfortunately use to keep on paying their other bills and fall in to big trap.They run their family in credit/debt and if they fall in to trouble they escape to their countries and some are in jails.

    DisAgree Agree [23] Reply Report Abuse

  • Vivian, Dubai

    Sun, Sep 07 2014

    Its true bcoz here documents are very less comparing to India. I struggle in India for Housing loan more than month, but here i got within a week. and from last one year exchange rate also good.

    DisAgree [2] Agree [32] Reply Report Abuse

  • Melwyn Pereira, Mangalore/Canada

    Sun, Sep 07 2014

    Its a shame if you live in a tax free country and are in debt. Try to manage your finances. Spend less than what you earn. I lived in the UAE for 27 years but was never in debt. This was 5 years back. With substantial savings I could move on.Try to spread your legs within your mattress - an old saying that all of us must adhere to.

    DisAgree [12] Agree [56] Reply Report Abuse

  • Dev, Mangalore

    Sun, Sep 07 2014

    Credit lending businesses need more people to avail loans to make profit.
    The interest rates in Gulf are low compared to India. Many utilize this benefit & invest the money back home which gives rich dividends back.
    Salaried people who get regular salaries & those who know how to balance their finances without indulging in spending spree will always get good credit rating which will enable them to avail more loans in future.

    DisAgree Agree [9] Reply Report Abuse

  • harish, dubai

    Sun, Sep 07 2014

    I am working in UAE since many year really I dont avail any loan But credit card company compels us to take loan by many offers

    DisAgree [3] Agree [23] Reply Report Abuse

  • Samson Rebello, Kallianpur / Dubai

    Sun, Sep 07 2014

    Hard to believe but its true, Credit card is the biggest trap, have it only if you are able to pay 100% when due. Give a standing instruction to bank to deduct from your saving account every due date and make sure you have the money which you spent to repay in your account. I manage it that way. "Chape iddastu kalu chachu" All glittering is not gold sometimes.

    DisAgree [1] Agree [25] Reply Report Abuse

  • R.Fernandes, Dubai

    Sun, Sep 07 2014

    8 of 10 UAE residents are in debt 25% have defaulted.
    Below that,
    Home loans at 6.99% on all our homes.
    I think they want them to be debt ridden in India also!!!

    DisAgree [2] Agree [11] Reply Report Abuse

  • Sachidanand Shetty, Mundkur/Dubai

    Sun, Sep 07 2014

    May be or may not be true but I am lucky enough to fall in other group i.e. 2 out 10 not in debt within UAE!!!! May be due to my professional academic knowledge or experience, many people like me might have calculated their Income and spending in such a manner that we don’t end up in debt at any time…. As long as people know how much they have to spend based on their monthly income, I am sure people can manage their known resources in better manner, but when it comes to outside UAE, sure I am falling on 8 out 10 category too since I do take housing or car loan back at India too

    DisAgree [12] Agree [38] Reply Report Abuse

  • A. S. Mathew, U.S.A.

    Tue, Sep 09 2014

    Very few people have that mindset of balancing the budget spending exactly based on the income. When compared with other Gulf countries, UAE is a shopping paradise and while walking through the malls and shopping centers, the average person is not totally controlled by solid sense and rationality but driven by an impulse of buying something attractive. If we yield to the pressure of our children, since they don't have any idea about money, they will push us to buy everything they see, and we can't say no to that so spending beyond our means and plunging into deeper debt.

    DisAgree Agree [1] Reply Report Abuse

  • SHAMS, MLORE DUBAI

    Sun, Sep 07 2014

    100% true....

    DisAgree [5] Agree [35] Reply Report Abuse


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