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Dubai: Financial experts have urged UAE residents to get a ‘No liability letter’ from their banks after settling a loan or cancelling a credit card to avoid problems in future.

Instances abound when people have been detained at immigration desks or have had trouble getting a property registered because they did not procure a clearance letter from their banks.

A British expat claims he was held up at the airport when he was travelling to London from Dubai last November after his name showed up on the list of defaulters even though he had cleared his Dh200,000 bank loan.

“It was only after I got the letter from the bank two days later that I was allowed to travel,” he said.

Indian expat J.K. said he could not get a property registered in Dubai as records showed he had an outstanding against his credit card. “This happened last year. I wish I had known about the importance of a clearance letter earlier,” he said. Mohsin Aikal, head of consumer finance, Noor Bank, said some people mistakenly believe that their liability ends with the bank once they have cleared their loan. “Often this is not the case and they must get a formal clearance letter from the bank.”

Al Etihad Credit Bureau

He said people should also check their credit worthiness from the Al Etihad Credit Bureau headquarters in Abu Dhabi to find out if they have any outstanding balance. Charges are Dh70 for a short report and Dh110 for a detailed summary.

Similarly, those with an auto loan must get a vehicle mortgage release letter through the Roads and Transport Authority (RTA) to avoid hassles. “Sometimes the customer thinks he has settled the amount in full but there could be a residual amount pending,” he added.

Ambareen Musa, founder and CEO of Souqalmal.com, said: “Bank customers usually exercise due diligence when applying for a loan or credit card, but tend to ignore the protocol when settling their debts. A clearance letter, also commonly known as a ‘No Liability letter’ is a legal document issued by the bank stating that the customer has paid off and settled all outstanding dues to the lender, with reference to a loan or credit card account.

The clearance letter is a legal proof of closure of your loan or credit card, and it is an important document that can help you avoid any possible disputes with the lender in the future. And now that credit reporting is quickly becoming the norm in the UAE, it would be advisable to obtain a No Liability letter from the bank, so you can rectify any errors in your credit report.”