How to avoid personal loan rejection in the UAE?

Loan rejected
Loan rejected

The banks in the UAE play dirty with their customers. They behave as if they are obliging their customers by letting them keep their money in the banks whereas it should be the other way around. Despite of all the research you do before applying for personal loan in the UAE, there is high probability of your personal loan being rejected. Did you go to the best place to get a personal loan? Doesn’t make a huge difference. Well, so how do you avoid personal loan rejection in the UAE? Scroll down:

  1. Check your credit report

Two non-negotiable criteria whilst applying for personal loan are credit history and credit score. You are likely to face a loan rejection in the UAE if your credit history is poor and credit score is low. Defaulted loan repayments in the past will lead to poor credit history.

Pro Tip: Use your credit card wisely to improve your credit history and build credit score.

  1. Proper documentation

Documentation plays a substantial role when applying for personal loan. Even a single erroneous document can lead to rejection of personal loan. So, crosscheck all the details in the form and attach appropriate documents.

Pro Tip: Clarify your doubts before submitting the final version of the application form and double-check your contact details.

  1. Clear up your debt

Trust plays a vital role in advancing loans from bank. An assurance of repayment of loan is substantial and to win the trust of the insurer, ensure that you clear up all your past debts. This leaves an impression and reduces the DTB ratio. DTB ratio plays a crucial role in the loan approval process.

Pro Tip: Settle existing debt before applying for a new one.

  1. Disclose your intention for the loan

Personal loan can be utilized for n number of purposes. To get a low interest personal loan, disclose your intention on the application form so that the bank can offer you the best rate as per your utilization of the funds.

Pro Tip: Be honest to avoid loan rejection.

  1. Check employer’s bank

By applying for personal loan with your employer’s bank, there’s a high probability of loan approval as the bank is in good relations with the employer. Also, it offers an extra level of security to the banks.

Pro Tip: Check with your HR manager if you don’t know your employer’s bank.

  1. Check the minimum requirement

The criteria for granting loan varies from bank to bank. So, before applying for personal loan in any of the banks, do find out all the details and minimum requirement. The documents required will depend on your principal amount.

Pro Tip: Work out your monthly repayments by calculating the interest.

Where can I get a personal loan” is what you ask? Well, that’s a secondary question. Primarily, focus on ‘How to avoid personal loan rejection’ whenever applying for personal loan in the UAE.

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Why you should buy insurance from independent financial advisors?

Taking a wise decision is the only option when it comes to buying an insurance because it is the most critical part of any financial planning. But with so many insurance products, insurance plans and insurers in the market, it’s okay to be perplexed. Whether to approach financial institutions or independent financial advisers is what you ask? Here we are vouching for independent financial advisers not because we are one of them, but because we want you take an unbiased decision.

insurance from independent financial advisors
insurance from independent financial advisors

Let’s take a quick look:

  1. You need choices to make good decisions

Buying an insurance policy from a financial institution comes with the sales pitch of different insurance plans from that respective institution only. For example, an agent from company A will give an insight on plan A to Z from company A itself.

On contrary, an independent financial adviser is unbiased and will nourish your appetite with the insurance plans from the market that are best suited for your requirements.

  1. Strategic financial advice

Buying an insurance policy is a complex and intimidating process which needs strategic financial advice to materialise the contract for the benefit of both the parties involved. Legacy insurance makes it all the more complex. So, going for an independent financial adviser is the wisest decision that anybody can take as it not only simplifies the process but also backs you with well-rounded financial advice’s. They are free to recommend insurance plans from multiple sources which can enhance their creativity as a problem-solver.

  1. Value-for-money insurance plan

An independent financial adviser has access to all the insurance plans in the market. Thus, they can help you by offering you the most affordable and value-for-money plan that saves you some money irrespective of slight compromise on the protection. Also, with their expertise they can let you know if you are overpaying for any of the insurance policies.

  1. Most knowledgeable in the financial market

An independent financial adviser needs a timely update to his/her ‘Insurance bible’ because he/she is bound to offer nothing but the best to his/her customers. Independent financial advisers are the official ‘Mr. / Ms. Know-it-all’ of the insurance market. They need to know the eensy-weensy of every insurance plan and insurance policy in the market. They should be well-versed with the technology as people nowadays are going smart by going paperless.

  1. Online insurance

As mentioned previously, people are going smart by going paperless. Online insurance is the latest trend to buy insurance. People with just a few clicks can buy insurance online via internet. Buying an insurance is already an intimidating process and buying it online can be a little more complex due to the technology-gap. But, no need to worry as independent financial advisers are waiting out there to offer you step-to-step guidance. ‘Customer satisfaction’ matters to them the most!

So, what are you waiting for? Contact an independent financial adviser right away and experience the best yourself!

Deciding Between Savings Accounts Or Term Deposits

Savings is the need of every household for security and surety in case of emergency. To facilitate and meet the needs of its customers, banks offer varied kinds of options for savings and investment viz. Offshore Deposit Accounts, Savings Accounts, Term Deposits etc. Before choosing an investment type that best suits your need, you should go through the pros, cons and limitations of every form of banking. The decision of selecting a particular form of investment should be mooted in depth. Here are few details to ponder over before deciding whether to invest in Savings Accounts or Term Deposits.

Savings Accounts Or Term Deposits
Savings Accounts Or Term Deposits

The greatest advantage of Term deposits is that they yield more rate of interest than Savings Accounts. It is known worldwide that higher return on investment is one of the major reasons why people decide to opt for time deposits over savings account.

However, the savings bank account have an edge over fixed deposit account in a manner that one can deposit and withdraw money from Savings Account anytime they want, without losing any interest. But in Term Deposit you lose interest if you withdraw your investment in the midst of its tenure.

Furthermore, the added advantage of withdrawals from any bank branch or ATM for emergency situations is a point one should think over, since Term Deposits do not offer such facility.

Having said that, few are of the view that since the fear of losing interest is high, people tend to cut down their expenditures if they have invested in term deposits. The lessened expenditure can inculcate the habit of saving. The facility to withdraw money anytime you want does not imbibe that habit in you.

Each and every individual is unique and so are his habits, needs and wants; one should choose an investment type that best suits his/her requirements. There is also a view that one becomes complacent if they have a term deposit, they tend to stop saving thinking they have saved enough.

So, one should always observe habits and past history before deciding on an investment type. Many believe that Offshore Accounts are the best investment types. Tax Havens provide more interest than a traditional bank in a country, so one can also opt for Offshore Deposit Accounts. Citibank IPB offers great services to its ever-growing clients in Offshore Banking.

In the initial stages, one should go for savings account to begin with little investments made over a long period of time and then magnify the investment base by adding term deposit investments. One should opt for a blend of both savings and fixed time deposit to have the best of both worlds. Citibank offers customer friendly and easy to use services in savings and term deposit investment. More savings, more security!

Offshore Investing Using Structured Products

Offshore Investing Using Structured Products
Offshore Investing Using Structured Products

In an earlier post, we looked at how offshore banks offer investment solutions for the needs of high networth clients like you. Here, we will delve into the depths of high finance / financial engineering and look at how structured products can help you with your investment needs:

What are structured products?

Structured products are fixed-term investments whose payout depends upon the perform of an underlying benchmark such as interest rates, equity markets, commodities, corporate credits or foreign exchange markets. Structured products provide you with the potential to earn higher returns than are offered by conventional banking products.

What kind of capital protection is available with structured products?

Full protection – Or, 100% capital protection. This means that the minimum that you receive on maturity should be at least equal to the amount originally invested.

Partial protection – How much of your original investment you get back depends upon the performance of the underlying benchmark and only a proportion, say 70% is protected by the capital guarantee.

What are the main structured products available?

Structured deposits combine a deposit with an investment product. The return on a structured deposit depends on the performance of the underlying benchmark or asset. Structured deposits may provide higher returns when compared to traditional fixed deposits but you take on more risks when you buy a structured deposit, including the risk that you receive returns that are lower than expected. At maturity you will receive the principal amount of the structured deposit; but, if the deposit is withdrawn early, you may not receive 100% of the money invested back.

Foreign exchange linked structured deposits are short-term deposits that can meet your foreign currency needs while potentially offering higher interest rates than traditional fixed deposits. They can take the following forms:

Dual currency deposits – They can provide you with potentially enhanced returns in one currency in return for accepting possible repayments of the deposit principal plus interest in another currency. They may come with a “Knock-out” that remove the risk of conversion when the specified knock-out level is touched or breached. Or, they may feature a “knock-in”; in such a case, they become active only when the specified “knock-in” level is touched or breached.

Range deposits – They allow you to take a view on the future movement of a foreign exchange rate to earn a potentially higher return. This higher return is derived from the higher risks associated with exposure to foreign exchange.

Structured notes are investments whose return is linked to the performance of one or more underlying asset(s) or benchmark(s). Underlying assets or benchmarks could include market indices, equities, interest rates, fixed-income products, foreign exchange rates or any combination of these.

It may be the interest amount and/or principal repayment, which are linked to the performance of the underlying instrument. Structured notes differ from structured deposits in that you will receive the principal amount on maturity of the structured deposits while you potentially stand to lose the whole principal sum when investing in structured notes.

Your offshore bank may be able to advise you as to the level of capital protection that you may structure with the choice of your structured instrument.

Structured products – questions to ask

Before you make a decision on using structured products in your portfolio, you could consider asking your relationship manager / portfolio manager the following questions:

What are the features of this structured product?

What are risks associated with this structured product?

What are the expected returns on this product?

How does this product fit my investment needs given my risk profile?

How much fees would the offshore bank earn on selling me this product?

How can I exit this structured product and what should I expect when exiting?