Bankers are endlessly resourceful in finding legal ways around any regulations that threaten to limit their profits. Today's Business section of The National sets out some details of the banks' new-found agility in the field of car loans.
Back in February the Central Bank announced a new rule as part of a package of changes in banking operations: effective May 1, car loans could no longer cover 100 per cent of a vehicle's price. The new limit was 80 per cent. (Access to consumer credit was tightened in other ways and bank fees were limited at the same time.)
The idea was to make sure that no new tide of bad consumer debt, in the event of another global downturn or for any other reason, could swamp borrowers and put financial institutions in peril.
But banks, apparently serene in their focus on short-term profits, have artfully found ways around the new rule, as we report today: many car buyers are finding it easy to get personal loans or to use credit-card debt to cover the "missing" 20 per cent of car-loan financing.
This works well for banks that can earn higher interest on unsecured loans, and certainly on credit cards, than on car loans. But in anything beyond the short term, this gimmick is too clever by half.
A car dealer's sales director called these tactics a "solution" for buyers, but in fact this particular type of access to credit is more likely to be part of the problem, for borrowers and lenders alike, in the event of any new economic storm.
With the total interest cost now higher, the new 80-plus-20 financing leaves clients more vulnerable, not less, to any income setback, be it prompted by personal or worldwide events. In the event of economy-wide trouble, this naturally leaves the banks, in turn, more vulnerable.
In an ideal world people could borrow and banks could lend all they wanted - but each would bear appropriate risks as well as the benefits of the transaction. In a world of credit crunches, deep economic instability and moral hazard, however, wide-open lending has already been exposed as the fast lane to trouble. In the last two years banks have been working hard to clear bad loans from their books. They should have learnt the lesson of prudent lending by now.
SPECS
Engine: Two-litre four-cylinder turbo
Power: 235hp
Torque: 350Nm
Transmission: Nine-speed automatic
Price: From Dh167,500 ($45,000)
On sale: Now
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
The%20Iron%20Claw
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Sean%20Durkin%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Zac%20Efron%2C%20Jeremy%20Allen%20White%2C%20Harris%20Dickinson%2C%20Maura%20Tierney%2C%20Holt%20McCallany%2C%20Lily%20James%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
The Dictionary of Animal Languages
Heidi Sopinka
Scribe
England-South Africa Test series
1st Test England win by 211 runs at Lord's, London
2nd Test South Africa win by 340 runs at Trent Bridge, Nottingham
3rd Test July 27-31 at The Oval, London
4th Test August 4-8 at Old Trafford, Manchester
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
The Matrix Resurrections
Director: Lana Wachowski
Stars: Keanu Reeves, Carrie-Anne Moss, Jessica Henwick
Rating:****
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey