Cruising for Savings: 7 Tips for Smart Car Purchases in Dubai
Buying your own car in Dubai can provide you with a wealth of convenience and comfort. But since it is such a big purchase, you must ensure you’re getting value for your money.
العربية
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Dubai can be a land of adventure for those who have chosen to move here. But what fun is it living in Dubai if you can’t move around in a fun, convenient, and comfortable way?
The metro won’t give you the same level of convenience and ease as having your own car. On the other hand, owning a private car can quickly add up to make them unaffordable.
So, is it easy to buy a car in Dubai? Well, amidst the gleaming skyscrapers and high-end boutiques, there lies smart and savvy ways to navigate one of life's significant purchases.
Whether you're a seasoned resident looking to upgrade your wheels or a new expat embarking on your first automotive journey, mastering the art of saving money while acquiring your dream ride is a pursuit worth undertaking.
In this article, we will teach you how to buy a car in Dubai by highlighting various tips that will help you get the best value for your money.
We’ll cover:
[Are you ready to start saving towards the purchase of your car? Download the Maly app to create a savings plan and automatically save money from your bank account(s).]
Before we delve into the meat of the article, let’s consider some legal requirements for buying a car in Dubai.
If you are buying a new car, you will need to present the following documents:
You can proceed to buy a car if you have all these documents handy. If anything is missing, start making plans towards getting them before you head for the showroom.
Be aware that after the purchase you will need to register the new car with the Roads and Transport Authority (RTA). It costs AED 420 to register a new car. However, you will need to provide the following documents:
The car registration process is often hassle-free; if all the documents are ready, you will be done in a few minutes (provided there are no outstanding traffic fines). Afterwards, the RTA will give you a vehicle plate number, the Mulkiya card (also known as vehicle licence card, and expiry stickers.
Note also that in Dubai, vehicle registration renewal takes place every year.
There is a big used car market in Dubai in particular and the United Arab Emirates in general, and it comes with its own paperwork. Mordor Intelligence, a market research firm, valued the market at $20.03 billion in 2021 and expects it to grow by 11% CAGR and be worth $32.07 billion in 2028.
Buying cars in this market is a bit different from buying a new car. You will need extra documents like:
With these documents, both you and the previous owner can visit the traffic department of the Dubai Police to effect a transfer of ownership.
Before registration can proceed, you must have gotten the inspection certificate (which costs AED 170) and completed the transfer of ownership (which costs AED 350).
The other documents you need for registration are:
The registration will cost AED 420 as well after which you will receive a vehicle plate number, the Mulkiya card (also known as vehicle licence card), and expiry stickers.
While a car is an important item to have in Dubai, it is only one expense among many important others.
Before you even begin to research the cars you want, you need to have a budget. More practically, you need to have a budget range (say AED 70,000 - AED 90,000).
Even if you are financing the car, a budget is still needed. Most banks will require about 20% of the purchase price as down payment. How much cash can you afford to put down to buy a car right now?
Furthermore, what portion of your monthly income can you afford to pay for the car financing?
You should not enter a car dealership, a bank, or start shopping online without a clear grasp of what you can afford without harming yourself and your family. If you don’t do this, salesmen at the bank or the car dealership can talk you into buying what you can’t really afford.
Put simply, to save money, have a budget.
Source: Carscoops
With a clear budget, you can start researching the cars that are within your budget. Online stores are usually the best for this type of analysis. You can visit a site like Dubai Cars (or Cars24, which provides listings for Abu Dhabi, Sharjah, Ajman, and other emirates) and identify all the cars that are within your budget.
You will find popular brands like Toyota, Ford, Honda, BMW, Jeep, Nissan, Mazda, Mercedes-Benz, Mitsubishi, and others like Infiniti, KIA, Audi, and Renault.
If you can't afford any new vehicles, you can opt for a used vehicle. Here, it is worth noting that some experts believe that high-quality pre-owned cars are even better than new ones (cost aside).
“A new car typically depreciates about 15 per cent to 20 per cent on the day it is driven off the showroom floor,” says Marwan Chaar, Co-CEO of Kavak GCC, a used-car retailer. “For anyone looking to save money, the best approach is to buy a high-quality used car.”
On the other hand, “the majority of banks will want you to pay off your loan before the car gets older than 10 years,” according to Car Switch, another car retailer. This means that “older models will have higher monthly payments or the bank may not even approve your loan application.”
So, even when choosing used cars, try and prioritise newer models to reduce monthly payments. By Car Switch’s logic, this means you need to subtract the number of years it will take to pay for the car from 10 to determine how old the car can be.
For example, if you will service the car loan for five years, then you should focus on used cars that are not older than five years. Anything older than that will mean higher monthly payments.
Yet, new cars also have their own advantages – warranty, lower financing rates, no defects, etc.
In the end, it will be up to you to weigh costs and benefits and choose the one that is best for you.
The next task is to identify which of the cars on your list is the best for your situation. You will have to consider the lifetime cost of the car. That is, what will the fuel, servicing, and maintenance costs look like in comparison to the others?
By doing this research, you will avoid buying a seemingly cheaper car with a very high lifetime cost.
Also, you need to evaluate the specs of the cars and consider which is best suited for the weather conditions in Dubai and your own peculiar needs. If you do desert safaris regularly, ask which of these cars can conveniently make those trips.
After selecting the car that is best for you, it’s time to take a visit to the store.
Even though you already have the car you want to buy in mind, it is still better to go with someone else (preferably a mechanic).
Is this necessary for new cars?
Yes. When an expert or a more experienced car user sees a car, they can tell to a great extent, after a test drive, if that car will be ideal for you. This is especially important if you are a first-time car buyer.
For second-hand cars, going with an expert is especially essential. The National News told the story of Mladen Zivanovic who bought a second-hand Nissan Versa for AED 17,000 only to discover that it’s an accident car with many defects. If he had gone with an expert perhaps this sale could have been avoided.
For used cars, in addition to going with an expert, ensure you take the car to an authorised testing centre (Tasjeel Centres) for a comprehensive inspection. It’s better to spend a few dirhams now than spend thousands buying a car you will later regret.
You can also do a VIN or Chassis number check to see the history of the car. With this, you can determine if the car has any history of accidents or major damages.
Source: Dubizzle
Some car dealers will offer you various value-added services (free mud flaps, floor mats, extra keys, free servicing for a period) in a bid to get you to buy from them.
However, it is important to be sure that these freebies are not coverups for selling the car at above-market rates. Why take freebies worth AED 500 when the car is already selling at AED 2,000 above market price? In the end, you are the one losing money.
To avoid this situation, ensure you compare prices for your target car among various dealers. Compare the extra cost with the freebies to determine if they are worth it.
With used cars, an above-market price might be justified by the quality of the car (maybe the previous owner maintained the car well compared to others). But even here, you need to be sure of what you are paying for and whether it is worth it in monetary terms. Paying an extra AED 500 for a “nicer-looking car” is not the same as paying it because the tires were just replaced with new ones two months ago.
“If you can afford to pay for the deposit [down payment] yourself, do it,” said Paul Willetts, an automotive consultant and founder of Gemini Automotive Solutions, in the The National News report quoted above.
Having to borrow money from another bank or financing company to make the down payment for a car loan might be a sign that you are not ready to buy a car. Paying two loans at the same time might place unnecessary pressure on your monthly savings plan.
On the Policy Bazaar website, financing rates vary from 1.99% to 3.45% for flat rates and 2.80% - 8.25% for reducing rates.
According to Car Switch, quoted above, you can get better financing rates by doing two things:
First, use the same bank where you have your salary account. Since your salary goes there, they might perceive you as less of a credit risk which makes it easier to get lower rates.
Second, negotiate a better rate with the bank. Naturally, the bank will insist that the rates are fixed. However, if you show your negotiation prowess, you might be able to get a reduced rate.
If you prefer to buy your car with cash, you need to save money towards it. And even if you want to finance, you need to get the down payment ready.
But in a city like Dubai where there are many things to spend money on, saving can be very hard. “Residents of the UAE benefit from very low to no taxes, however, most of them are still unable to save,” writes Waheed Abbas in the Khaleej Times.
It’s this problem that we are attempting to solve at Maly. Our aim is to help you save money for important financial goals like down payment for your car purchase. We do this in two ways:
First is our smart savings solution. With this solution, we allow you to automatically save money by rounding up your small daily purchases (to 1, 5, or 10 dirhams). So, for example, if you purchased groceries worth AED 95, you can choose to round it up to AED 100 (a 5 dirhams round up) with the extra AED 5 deposited into your savings card.
We link your Maly savings card to all your bank accounts (and debit cards). As you make purchases with your debit cards, the amount rounded up (with round-up limits up to you) is automatically added to your savings card.
Second, we allow you to create a weekly or monthly savings plan. With this solution, you can automatically deduct a specified amount from your bank account at weekly or monthly intervals. By automating this process, we reduce the amount of discipline required to save money.
Furthermore, you can create savings goals or targets and monitor how far or close you are to achieving them. In our case, this means you can create a savings goal for your car down payment (or the full purchase price if you so desire) and use the two solutions outlined above to save towards that goal.
If you want the convenience, comfort, and fun that your own car provides in Dubai, then you can start using Maly to save towards it. Remember that using your own cash for down payment is more cost-effective than borrowing.
[Do you want to save towards the purchase of your own car? Download the Maly app, set a car purchase savings goal, and start taking steps towards achieving your goal.]
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