Charged late fees for a loan

Charged late fees for a loan

I want to share my experience with National Bank of Abu Dhabi (NBAD). They offered me a personal loan with an interest of 5.49 per cent per year. But, when I checked through online banking, it was showing up as 5.99 per cent. Their reason is that interest rates may change or fluctuate at any time, but the offer letter they gave me in August and September 2016 showed the same, that is 5.49 per cent.

I believe this is their marketing strategy to attract customers. What surprised me was that they charged me a late payment fee, even though my loan application is still in process and the loan amount has not been released yet. How can they charge a customer who is still awaiting for the loan to be released? My salary has also not been transferred to them yet. They also started my equated monthly instalments (EMI) in September, while I am still gathering the necessary documents.

I had a few personal loans before and know that the EMI should start after releasing the loan amount — not during the processing. I complained to the bank, but the said issue was not resolved.

Later, on October 11, the loan amount was released. But the late payment fee was charged in advance. I have a few regrets banking with NBAD and I do hope this will not happen to other customers.

From Mr Jerome John Sagusay

Dubai

The management of NBAD responds:

We have investigated Mr Sagusay’s complaint. Mr Sagusay applied for a Personal Loan of Dh100,000 with a 5.49 per cent per annum variable interest rate on August 9, 2016. The loan was approved and disbursed to Mr Sagusay’s account on September 6 with the first payment date of September 24 as per the agreed and signed contract.

(Article 13) – Interest, Commissions & Fees: If the Interest Rate on this loan is a Variable Rate of Interest, then the interest rate to be applied is the NBAD Personal Loan Base Rate (PBR) or the NBAD Retail Base Rate (RBR), as declared and published by the Bank at the beginning of each calendar month on its website, and on the information board at all the domestic branches.

With regards to interest rate, we need to highlight that Mr Sagusay’s loan comes with a variable interest rate, and due to the increase of Emirates Interbank Offered Rate (EIBOR) of 0.5 per cent, the interest rate for the loan had changed to 5.99 per cent. The details are mentioned in the loan application, the NBAD website and Mr Sagusay was informed by our sales department.

This particular loan was a ‘buyout’ liability from Emirates NBD, and with that, there are a few steps that need to be achieved before the already dispersed amount is unfrozen for his use. First, we issued a settlement cheque of Mr Sagusay’s liabilities to Emirates NBD, and await a clearance letter.

We also require a Salary Transfer Letter (STL) from Mr Sagusay’s employer. However, Mr Sagusay did not supply us with the STL until October 11, at which point the loan was released for his use. But due to the delay of the STL, unfortunately, the first interest payment due on September 24 was drawn on his account as per the agreed repayment schedule.

We have been in contact with Mr Sagusay to clarify the points he has highlighted.

Mr Sagusay responds:

NBAD contacted me on November 16. I was told that they would try to refund the late payment charge. If my salary was with them already and they charged me a late payment fee, I would accept it. They knew it is a salary auto-debit account, so they should have waited for the salary to be transferred first.

The management of NBAD responds:

Thank you for forwarding us Mr Sagusay’s concerns. We have contacted him once again to clarify and have resolved the matter to his satisfaction.

Mr Sagusay responds:

The issue has been resolved. Thank your Gulf News for the help.

(Process initiation: November 7. Response from organisation: November 9. Reader confirmation: November 29.)

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