A crash course in auto finance

During an hour-long wait in the bank last month, I came across a client doing his paperwork for an auto loan. Since he had all the required documents, I assumed it wasn't his first visit.

He seemed, however, overwhelmed by the procedure and showed none of the excitement of someone who was going to drive his new car soon.

He was so intimidated that he made some obvious mistakes, such as signing a contract without reading it, and allowed himself to be bullied by a customer service agent.

That agent did not offer him a chance to read the contract. Instead, he never let go of the papers and in a very strict voice instructed the client to "sign here, here, and here". One of these "sign here" was on a blank cheque.

Once this was done, the client asked in a very timid voice whether he could obtain a copy only of the re-payment table. The agent now restored his professional smile, and immediately handed him a photocopy.

Negotiation

Since I had taken out auto finance from the same bank, I do know how the whole procedure works, I also know there are many negotiable points and others that I had to swallow because I wanted to proceed with the transaction.

Expatriates may take some financial issues for granted based on their backgrounds. For example, I was trained that under no circumstances should I sign a blank cheque. Banks here seem to love blank cheques, which they call security cheques. I don't see the point of them though.

If I am receiving car finance at a set price and an agreed interest rate, why should I give the bank an unspecified amount of money as security?

Unlike the riot I raised at the blank cheque thing, I saw the intimidated client sign a cheque without addressing it to the bank or specifying the amount! In my case, I not only filled in all the cheque fields, but I also added a clear reference to the transaction.

Then I asked for a copy of the cheque, stamped with the bank's seal and signed by the customer-service agent, who collected it on behalf of the bank. I already had a copy of the contract in hand. Was I an annoying client? Perhaps, but I sleep better at night.

Commitment

I never doubted the agent's integrity or the bank's practices, but I believe it is my right to have a reference to my rights and duties when undertaking a financial commitment.

You may not be able to change bank regulations, but try at least to know about them as early as possible, and don't overlook the points on which they don't want to elaborate.

A friend of mine came to complain that she needed to sell her car, but the bank informed her that she had to pay off the outstanding balance first. This is a case of early settlement, which she was supposed to check before signing the contract.

Expatriates whose stay in the UAE can be voluntarily or involuntarily terminated for multiple reasons, should never go ahead with a bank deal if the bank fails to clarify the charges and requirements for early settlement.

Another example of what you need to look for in an auto finance contract is the travel ban. Look at the back of your car's registration card and you'll see that it specifies the name of the financier. To drive your car outside the UAE, you need the bank to issue a release letter.

The letter is usually issued at an administrative fee and for a specific period. Once again, it depends on each bank's regulations, but you may be required to deposit the whole outstanding amount in the bank, or issue one more security cheque.

It is unclear whether you need such a letter for crossing the border to Oman. Although I went through the whole process recently to spend few days in Muscat, I wasn't asked to show the bank's release letter at any of the border checkpoints.

Why didn't the customer service agent save my time and money and say it was not required for Oman?

I am inclined to think that people who don't worry about contract clauses are adopting the attitude that ignorance is bliss. Unfortunately, I cannot get myself to follow the herd.