Whether you have been living in the UAE for many years already or just settled, you might have come across the dilemma of buying a car versus renting one.
With attractive deals being proposed by rental companies, going for this option seems a smart choice. Below are it’s pros and cons.
Leasing a car: advantages
1. Lower financial constraints: renting a vehicle can be assimilated to vehicle financing but without the same obligations: no down-payment or bank guarantee, except for the credit card deposit (usually not debited).
2. Flexibility: for UAE expats, annual leave means going back home for a long period of time. Car leasing allows you to return the car while travelling and therefore make substantial savings.
3. Peace of mind: you will not have to deal personally with insurance, registration, servicing or maintenance of the vehicle.
4. Latest models: car rental companies always keep in their fleet the latest vehicle models. You can often get drive recent or even sometimes zero mileage cars.
Leasing a car: drawbacks
1. Penalties: if you signed up for a long term leasing agreement, you will be subject to financial penalties if you wish to stop it before its term.
2. Limited choice: car rental companies often specialize in specific brands or models. You will face a much more limited choice (engine size, color, options,…) when leasing.
3. Limited mileage: rental companies restrict the monthly mileage allowance. If you drive a lot, this will mean additional cost.
In a country like the UAE where cars are relatively cheap, you might be tempted to go ahead with the purchase option. Below are the pros and cons of buying a car.
Buying a car: advantages
1. Ownership: once the car is fully repaid (if financed), it will then become an asset, allowing you to capitalize on it’s resell value later on, unlike leasing.
2. Customization: while renting won’t allow you to make any modifications to the car (engine, painting, accessories), owning the car gives you pretty much no restrictions.
3. Trade-in: most of the car dealers nowadays offer clients attractive trade-in deals. This gives you the possibility to always drive the latest models, at a competitive price.
Buying a car: drawbacks
1. Associated costs: insurance, maintenance, servicing or parts replacement (tires, brakes,…) can considerably increase your car budget on the long term.
2. Faster devaluation: your car is very likely to lose up to 20% of its resell value the first year and about 10% every subsequent year. Keep this in mind when buying a car.
3. Personal liability: depending on the insurance coverage you subscribed to, any damages to the car or break-downs may be your full personal and financial liability if you own it.
Renting or buying is not an easy choice. Your personal financial situation, the time you plan to stay in the country and how flexible you can be will help you select the best option.