Despite many new and improved modes of public transportation in Dubai, buying a car in Dubai still has several advantages, most important of which is independence. So, if you’ve decided on buying a car, you may find you need financing for which CarSwitch.com has broken down several car financing options.
Securing a Car loan
This is probably the most convenient and popular option for financing your car. If you don’t have spare cash lying around or if you want to use the spare cash for other expenses, you can always apply for a loan to finance your new car.
But first, you need to understand how car loans work in the UAE, as different banks have their own eligibility criteria for loan approvals. Some of the loan considerations when buying a car in Dubai include:
- To apply for a car loan, you need certain documents such as your passport, Emirates ID, salary certificate, labour card, 3-6 months of bank statements and a driver’s licence. Along with that the car’s registration, valuation certificate of the car and the insurance policy documents will also have to be provided.
- In the UAE, you need to be at least 21 years of age to apply for a loan. Moreover, minimum salary requirements vary from bank to bank but generally start around AED 3,000-5,000.
- Some banks grant loans for new or used cars for a maximum period of 60 months. Though, for older cars the tenure can be even shorter.
- Banks only finance 80% of the car’s value and require a 20% down payment in advance. The downpayment is mostly paid to the bank, though some require that the down payments be settled directly with the car owner before the bank finances the rest of 80%
- Many banks specify a minimum amount of loan they will finance, which is around AED 20,000. And since banks finance 80% of the car’s price, it means that your preferred car of choice must have a minimum value of AED 25,000 to qualify for the loan.
Paying in Cash
Just like purchasing something over the counter, buying via cash is hassle-free and the transfer is immediate. You don’t have to worry about interest rate, your credit scores, late fees or any such issues. You can save up enough money and use the cash to buy car in Dubai, when you can truly afford it. But is cash better or loan for buying car in Dubai? Here’s how you can be sure. If you have a car loan for AED 50, 000 with a rate of 2.5% over five years, you could end up paying just over AED 4000 in interest during the loan tenure.
If you have AED 50,000 in a savings account and it’s earning interest at a lower rate than the rate for the car loan, it makes more sense to pay for the car with cash. Having cash in an account that is not earning interest is not of much use. You can put it to good use by avoiding getting a car loan.
The idea of leasing a car is financially viable if you don’t intend to stay in the country for too long. But the appeal of leasing is much more than just circumstances. It’s also hassle-free. For a monthly fee, you are guaranteed a car and all you have to worry about is gasoline. Plus, you don’t have to worry about down payments, insurance, registration and car depreciation. There is however, a maintenance cost (wear and tear) cost that comes with lease agreements.
Where do I go and what do I need?
- If you want to lease a car, you can go to trusted car rental franchises such as Hertz, Budget, Avis, or Sixt. You can also set up a long-term lease for 12, 24, or 36 months online.
- After you have settled on the choice your car and the length of your lease, you have to make a visit to the leasing company’s office and sign the contract.
- You will also have to provide certain documents such as your passport, a UAE driving license or a valid international foreign driving license, Emirates ID or a Dubai residence visa and a credit card.
The Bottom line?
The choice between buying a car in Dubai, with cash, through car loan or via leasing depends entirely on your choice and circumstances. It is important to calculate the full cost of car owning (such as registration and insurance) and shop for great deals!
To minimize the hassle of buying or selling, you can use a service like CarSwitch.com! Check out our deals of certified, inspected and warrantied new and used cars! Also, our car experts will guide with everything! Happy shopping!