The UAE has witnessed a rapid rise in digital loan applications offering instant cash advances, often processed within an hour, provided borrowers meet basic requirements such as being over 20 years old, having a valid ID, and a bank account.
These apps primarily target youth, university students, and low-income individuals, offering loans without credit history checks or salary transfers, making them convenient yet risky.
Experiences of Students and Families
Parents of university students reported high fees and debt collection practices by some apps, which contact parents when repayments are delayed. One mother revealed that her children borrowed 1,000 AED each but received only 750 AED, and the debt rose to 1,370 AED due to fees and accumulated interest.
Experts warned that such easy-access loans could foster early consumer debt habits, where students borrow for non-essential expenses, potentially trapping them in long-term financial obligations.
Expert Opinions
Banking expert Amjad Nasr emphasized the lack of financial awareness among students and parents, advocating for financial literacy and expenditure management rather than promoting quick loans. He also highlighted the need for regulatory safeguards for borrowers under 21.
Expert Ahmed Youssef noted that digital loans provide quick access to funds for those unable to meet traditional bank requirements but impose high fees and interest rates, increasing the risk of repayment default.
Central Bank Measures
The Central Bank issued a regulatory framework for short-term credit facilities, removing minimum salary requirements, allowing low-income earners access under the “Blue Segment.” Licensed finance companies are required to implement clear collection policies, disclose fees, and ensure borrower data protection.
Starting 2026, finance companies will be obliged to perform credit checks before granting loans to ensure responsible lending and protect consumers from over-indebtedness.
Experts stressed that digital loans should serve as an emergency financial tool, not an early burden, and highlighted the importance of financial literacy to secure better financial stability for the next generation.
