You’ve worked hard, saved some cash and are most likely thinking about buying the car of your dreams. Can’t wait for that joyous feeling of a new car smell? But little do you know what that car smell is actually costing you.
Besides figuring out amongst the multiple car showrooms and dealership options available these days, owning a car is a lot more stressful than you know, especially if you’ve just moved to Dubai. From paying for routine maintenance to keeping up with insurance and loan payments, car ownership costs can add up quickly.
Cars are an integral part of society since the auto boom of the 1950s. Nearly $15.9 billion is spent alone in car advertisements, and that number is only rising. It’s almost convincing that our freedom to go anywhere is secure. Unfortunately, they are most likely to take away your freedom & security. Not only are they a financial threat, but drastically depreciating. Can you think of anything else that you would spend that much money on that loses value on that quickly? And don’t think leasing is a better solution. Leasing companies set high prices so that you pay for the depreciation of their vehicle, and when it’s over, they still have an asset that they can resell. You can instead choose to be in the driver’s seat and not taken for a ride.
How much does the car itself cost?
Owning a car is expensive. Yes, it may be slightly cheaper than other countries like the USA & UK, but between the price of the vehicle and financing costs, owning one – let alone two – cars can drain your bank account quickly, especially if you are planning to stay here for a few years. Here are the five-average cost for each expense:
Cost of down payment & Interest rates
Loan and down payments are almost inevitable when it comes to buying a car. A down payment of 20 per cent on the value of the vehicle is mandatory according to the Central Bank’s rules, for both new and used cars. According to the Roads and Transport Authority, Dubai, one of the most commonly driven UAE cars is the Toyota Corolla.
Here is an example of this case:
- Total cost: Dh70,900
- 20 per cent down payment: Dh14,180
- Monthly fee: Approximately Dh980 for a 5-year payback plan
If you wish to relocate at any point, selling the car at a depreciating value isn’t the only loss incurred. Having to pay an early settlement penalty towards the loan also adds up to the total cost eventually.
While it is essential to keep these figures in mind, also note that insurance costs vary. For pre-owned cars, it is mostly higher, which could be as high as five per cent per year, while for new cars the rates range between 2.5 per cent to 4 per cent per year.
Cost of maintenance
If you’ve survived a year in Dubai, then you have gotten used to the dry and sunny weather, for the majority of the year. Don’t be surprised if you thought the weather wouldn’t damage your car considerably. Besides regularly spending on maintenance to rid the dust, expenses add up with additional maintenance on things like paint protection and tires. It can cost up to Dh1,000 for cleaning, service, and maintenance costs, on the low side. That is not all; cars left dirty can be fined Dh500 under the ‘My Vehicle’ campaign of the Waste Management Department of Dubai Municipality.
Cost of Insurance
One of the most expensive costs associated with car ownership is insurance, and it does indirectly add up to your total maintenance expense eventually. Yes, it comes as a lifesaver when it comes to recovering from damage or major breakdown with car parts, but regularly paying those insurance premiums can quickly add up the burden on your wallet. The cost ranges from Dh3,000 to Dh4,000 for comprehensive insurance.
Cost of fuel consumption & toll
Fuel consumption and Salik top-up can also raise the monthly cost of owning a car, depending on the amount of driving you to do and the routes you take. Fuel consumption can vary depending on your distance from work. It can vary between Dh4,000 to Dh5,000 in Salik and fuel costs.
Cost of resale
The reputation of a car brand significantly affects the resale value of a car. Considering that most expats are inclined to change their vehicles several times, this is an important consideration. The bigger and better-known car companies in Dubai hold their value over a period of time and will usually resell for a competitive price. Cheaper but lesser-known car makers will usually depreciate much faster.
As you can gather, all of these costs add up! Supercars or not, being unable to pay loan amounts are the reason why at least 2,000 cars are abandoned every year on the Dubai streets. So, before you think about spending that saved up money, here’s a better alternative for you. Car Subscription.
Car Subscription Model: It’s officially the thing!
It’s as simple as shopping for groceries or clothes on your phone. Using a car subscription not only gives you access to new vehicles but the convivence of upgrading to your desired car every month. Besides the fact that you won’t have to pay for aggressive loans, maintenance, or any additional charges, there is no added hassle of paperwork too. It is as simple as this:
- Download the app.
- Sign up. All you need is a driver’s license, national ID, and payment details.
- Once you have found your vehicle, sign up for the car and select your pick-up details.
With no compromise on quality, flexibility and cost-effectiveness are a dream come true with car subscriptions. You can have a new dream car every month! Who like’s being stuck to the same car for five years, especially in Dubai. Based on your needs, the month-to-month access to vehicles with no contracts and security deposits as in the case of leasing, or down-payments, gives you the ultimate freedom of driving around worry-free.
Just imagine you could have your desired vehicle delivered to you just like food or groceries anytime. Perfect for the adventurous minds, upgrade your car to an SUV and hit the road for the weekend trip. Have you got last-minute family coming to town? Worry not. Just sign up and have your chosen vehicle sent in less than three hours.
Car subscriptions are for everyone. Hold onto the savings for a mutual fund or your dream home, an asset with no depreciating value. It’s the one thing you can start doing now for your future, say no to car ownership and yes to car subscription. Go on and enjoy the set of shiny new wheels and the smell of a new car every month!