Focus: Personal loan perils

As per a recent report in Gulf News, the problem of loan defaulters in the UAE has worsened over the past few years.

It is not because people are trying to cheat banks but apparently due to the fact that banks are trying to lure consumers to opt for loans through irresistible offers.

Dubai Central Jail revealed that around 42 per cent of its inmates were jailed for failing to pay back bank loans. More than 60 per cent of them had been jailed for the first time and did not previously have a criminal record. Readers participate in the debate.

Increased consumerism leads to people taking higher personal loans.

Materialistic greed and the passion for outdoing others drives people to go on a spending frenzy. Lenders are on the prowl for such spendthrifts and noose them in the debt trap.

In the pursuit for materialistic happiness, people end up losing everything in life with the family bearing the brunt in the end.
Subhasis Mukherjee
Gulf News Reader's club member
India

Consumerism is a tendency of people to identify strongly with products or services they consume, especially those with commercial brand names and status-enhancing appeal.

However, the income has not increased at the same pace as consumerism. So, more and more people today resort to loans to cope with the increased cost of living and changing lifestyle.
Walter D'Mello
Dubai

Well, consumerism is definitely on the rise and that is because of the kind of products that are available in the market, which lures us into taking loans and becoming owners of the latest arrivals in the market.

As far as I am concerned, I am not in favour of this trend and would rather stick to the traditional way of planning and saving for things that I need, rather than want.
Saeed Sa'ad Hussain
Pakistan

Yes, because people's wants have increased and with the easy-to-get loans with low monthly instalments, one is sure to go for a personal loan. I mean I for one would definitely go for one. There is no harm in doing so.
Faisal Hania
Pakistan

Debt is a result of mismanagement of personal finances.

Yes it is, because people often don't keep tabs on their income and expenditure and then in a bid to balance it out, they opt for loans and then get trapped in trying to pay off the never-ending debts.

I think this is the case more so with credit card owners who go on a spending spree without realising that they are walking into a debt trap.
Parmeet Singh
India

Yes, it is. People need to plan their finances in order to avoid themselves from getting into such situations. Often, in order to avoid debts, people go to banks seeking loans hoping to pay them off but the result is usually the opposite.
Jasim Abdul
India

Definitely it is, especially for those who opt for credit cards. I think they just keep on trying to pay off the debt they run on using the card or you pay the fine for late payment.
Varun Gidwani
India

A person could be in debt because of mismanagement or because of unseen circumstances. I think the best way to get out of debt or to ensure that there is no debt is to always have some sort of an asset, which can be sold off in case a debt situation arises. If one were to plan and prioritise, such a situation would never arise.
Lucky Singh.
India

Banks fool people into taking big loans by not giving them the full picture.

Yes, that is true. Banks do not give the entire picture, the conditions and terms that one has to abide by. It becomes a problem because the consumer does not realise the issue unless it becomes a problem. So in the end, it is no one but the banks who have the last laugh.
A. Khoshaba
Iraq

Yes, banks do fool and cheat us. I have been a victim of this. Despite having cleared the loan, because of some condition I was unaware of I got into trouble.

I think the banks are smart as they try to lure customers with free offers and then the consumer gets trapped because of conditions that he is not informed of beforehand.
Saeed Hussain Raza
Pakistan

Yes, it's true some banks are fooling people when taking personal loans and I am one of the best examples of this.

Some banks will give you a higher loan amount and they will explain things in a way that it all looks easy. They encourage you to take a loan but the problem arises when you opt for it without knowing all the terms and conditions.
Jomarkirk See Manaois
Al Ain

I don't think that banks fool consumers. They do give complete information. It is just that often, in our hurry to get the loan approved, we don't bother to read the entire document or what is listed as important. So one can't blame the bank because of what one oversees!
Ahmad Essam
Egypt

Government should establish tougher standards for loan approvals.

Yes, they should. I think that government intervention will help the banking industry by ensuring that there are less or no frauds at all. It will be a move in the right direction for the industry.
Sonika Samtani
India

Yes, I think it is a good idea and would help the consumers greatly. They would be doubly sure about the reasons and conditions when they opt for loans and stricter rules would probably help them be sure of the loan that they take.

Also, they won't get lured by the schemes that banks offer so that one takes a loan.
Navneeth Anand
India

I don't think it is a good idea at all. If there is any government intervention, it makes things only too complicated and will also introduce a lot more restrictions. which could deter people from taking loans.
Nicola Moncteath
India

It would definitely be of help. If the government were to come up with rules that decide on the amount of loans a person gets depending on factors like his bank balance, his profession, I think it would be easy for both, the banks and the consumers.

Also, if the government were to set rules, it would also mean better enforcement.
Abdul Basit
Pakistan