Bank of Maldives: The Hidden Costs Behind Easy Loans

  • Maldives
  • Featured
  • Business
PUBLISHED 06 September 2023

In the world of banking, transparency is paramount, yet the Bank of Maldives (BML), the largest bank in the nation, tends to shroud its loan offerings in a cloak of secrecy, often emphasizing catchy marketing strategies while downplaying the crucial element of interest rates. This practice underscores the importance for borrowers to take the initiative and diligently compare different banks and their interest rates before committing to a loan.

BML's loans are often advertised as easy, quick, and efficient to apply for, highlighting the convenience factor. They boast a swift approval process, with loans often approved within 3 days. However, beneath this convenience lies the hidden business of high-interest rates, carefully omitted from the promotional spotlight.

As of today , BML's Lui Loan carries a substantial interest rate of 15% per annum. This is notably higher than the lowest interest rate available for a personal loan in the Maldives, which is 12%, offered by the State Bank of India (SBI).

It's worth noting that interest rates for personal loans can vary depending on the borrower's credit score and the amount of the loan. Therefore, potential borrowers must assess their own financial standing before committing to any loan agreement.

In addition to the interest rates, BML also charges other fees associated with loans, such as application fees, processing fees, and late payment fees. These additional fees can significantly impact the overall cost of the loan and should not be overlooked.

It is of utmost importance to read the fine print of any loan agreement carefully before signing it. This practice will help you understand all of the terms and conditions of the loan, including the interest rate, fees, and repayment schedule. By gaining a comprehensive understanding of the loan terms, borrowers can make informed decisions that align with their financial goals and avoid potential pitfalls associated with hidden costs.

To assist you in securing a loan with a lower overall cost, here are some valuable tips:

  1. Shop Around and Compare: Cast a wide net and explore interest rates and fees from various Bnaks  to identify the most favorable terms.

  2. Maintain a Strong Credit Score: Your creditworthiness plays a pivotal role in securing a favorable interest rate. Maintain a good credit score to enhance your bargaining power.

  3. Larger Down Payment: Offering a substantial down payment can reduce the overall loan amount and potentially lower the interest rate.

  4. Consider a Cosigner: If your credit history isn't robust, enlisting a cosigner with a strong financial profile can increase your chances of securing a lower interest rate.

  5. Shorter Repayment Period: Opt for a shorter repayment period, which can lead to a reduced interest burden over the life of the loan.

These steps can significantly improve your prospects of securing a loan with an interest rate and associated fees that align with your financial goals.

In a financial landscape where critical details are occasionally obscured, consumer vigilance stands as your most dependable ally, guiding you toward sound financial decisions and ensuring that you navigate the intricate world of loans with clarity and confidence.