Complaints

Corporate owners said that banks exaggerate the interest rates imposed on car financing for companies, although they are mortgaged until the completion of their installments.

They explained to «Emirates Today» that interest rates start from 3.7% and reach 6%, fixed annually on average, and may rise more than that, according to the policy of each bank, stressing that the calculation of this percentage as a value, raises the value of the car by more than 35% to 40%, from its original price, upon completion of the payment of its installments over 60 months.

They added that banks rarely offer offers on car financing to companies, but rather they do not reduce the interest rate with any reduction in the main interest, as well as difficult requirements related to account statements, credit evaluation, and so on.

They demanded that there should be support for companies, especially since the majority of them need to have cars within their assets to accomplish various operational tasks.

For his part, banking expert Tamer Abu Bakr said: “The banks are involved in any stumbling blocks that may correspond to companies, as there are fluctuations from time to time, which may affect the commitment to pay, unlike individuals. They have a fixed income and stable salary, and it is easy for risk departments to assess their credit status.”

Abu Bakr added: “It is true that these cars are mortgaged, but if there are stumbling blocks, they are sold by auction, and sometimes the price in which the remaining amount is sold does not cover, so banks resort to imposing a high interest rate, due to the high risk of financing.”

For his part, the banker, Mustafa Ahmed, said: “The credit evaluation of companies is quickly affected by any retriever checks, or stumbling blocks, and this is a subject of banks when financing companies in general, especially cars.”

He added: «This policy is in place in almost all banks. It is noteworthy that, according to the central bank system, banks provide car financing over a five -year period, or 60 months, a maximum payment, and the customer must contribute by 20% of the financing, while banks offer the remaining 80%.

The central bank does not interfere in the interests imposed by banks on various funds, including cars, leaving their determination to compete between banks according to the open market mechanisms, but it closely monitors the extent of banks ’commitment to the instructions and circulars issued by it, which regulates the granting of financing for all economic sectors.

• The interest rate reaches 6% fixed, and the value of the car increases after paying the installments 40%.