Cars in the UAE: Rental vs Buying New vs Buying Second Hand

I think it’s safe to say that the majority of adults in the UAE rely on a car to get them around.  Many Western cities have fully integrated public transport systems and although the UAE is implementing such services, for now, most do not offer a door to door solution which makes a car essential in the Emirates’ vast cities. You also have to factor in the discomfort in waiting for a bus in 45 degree heat – not every street has an air conditioned bus shelter!

I have spent a few hours working out the costs and benefits of rentals, new and second hand cars; I was amazed to find that even the cheapest rental costs more than a second hand, 5 year old, Nissan Xterra!  However cost should not be the only consideration – and there are pros and cons for each option – you can see what I mean below.

A new expat will have to hire a car for a few weeks until their visa is processed and they have acquired their UAE driving licence, but after that they have the choice of holding onto their rental or to purchase a car of their own.

Leasing/Renting Cars

Many continue to lease cars from a hire company and there certainly are benefits.  No registration, servicing or maintenance costs; if you have an accident or a breakdown it will be replaced asap.  However one down side is that drivers have to be named, whereas with an owned car, anyone with a UAE licence will be insured while at the wheel (this is useful if you plan a long road-trip with friends and ask them to share the driving); if you want to go to Oman for the weekend then you will need written permission from your rental company; if you rent a 4×4 then chances are that offroad use will be prohibited (if you are naughty and use offroad then you will have to pay for any damage as their insurance will not cover these – small dings are almost inevitable).

The cheapest rentals are generally small cars such as Nissan Tiidas and Toyota Yaris, these are quite nippy and economical to run, but in an accident they may not come off as well as the 2.5 tonne Landcruiser or  truck which is statistically most likely to be what hits you.

Brand New Cars

Buying a new car is a popular choice and if you are certain your job is secure for the two years (or whatever loan period you take it out over) then it is worth considering.  New cars are lovely – not just that great “new car” smell but also the fact that nobody else has driven it!  You are pretty certain that there will be no breakdowns and everything (including the all important AC) works well in it!  Cars have to be registered each year which is a simple and low cost process and they only have to be tested after they are three years old (this goes by the model year, or the year it was registered, whichever is the earlier.)

If you are borrowing money to “mortgage” a car then you must put down a 20% deposit.  Dealers are giving fabulous deals including low monthly payments on new cars at the moment but before you sign up for a long term debt, please google “debt in the UAE” and consider the implications if things go wrong for you out here. (If you buy Nissan then you should be able to sell a good condition car quite quickly).

Second Hand Cars

Apart from our FJ bought new in 2009, we have always bought second hand.  We search for a good clean model, preferably owned by a western expat, and our choice of brand and model have been dictated by offroad ability and also by how easy it would be to sell in a hurry.  We consider our Nissan Patrols to be currency – ie we could turn them into cash within days if we ever needed to, and we recommend our friends to do the same when purchasing a vehicle.  Monitor cars for sale on Dubizzle and Carnity to find out which make/model sells quickest!

Reliability is extremely important to us, so we increase our chances of buying a reliable vehicle by choosing Japanese.  Our favourite marque is Nissan – they are reasonably priced ; parts are easy to come by, even in the most remote corners of the UAE and Oman; and non-dealership garages generally know how to repair them.  (Toyotas are also good.)  If you choose Nissan/Toyota, do not worry too much about the mileage – so long as it has been regularly serviced and repaired then they will keep going til at least half a million kilometres. One year ago I sold my Nissan Patrol SWB with 389,000 on the clock and the new owner is still taking it out to the desert regularly, and our current two Patrols have this week both turned 275,000kms!

It’s important to do your research before you buy. Cars which are sought after “back home” may not do so well here in the excessive summer heat and the dust; an air conditioning system which may seem adequate in say, the UK, may not keep you cool here; and spare parts may have to be imported and take weeks to arrive!

We have bought cars from Dubizzle adverts, from friends/word of mouth and from non-franchised dealers in Al Ain and Dubai.  It takes a little effort to source a good car but we have always found it to be worth the effort.

Insuring Cars

Once a car is over 5 or 6 years old it can be difficult to find an insurer who will cover it on a fully comprehensive basis, particularly if you need offroad cover, and this is why I have compared the costs for 5 year old cars.  Guardian Insurance have always given us good quotes and we highly recommend them – read about insuring cars in the UAE here.

Repairing Cars

New cars will have all repairs covered by warranty which is one of the best things about buying new!  However, one of the biggest worries when buying a second hand car is “what if it breaks down.”  Here in Madinat Zayed we have an excellent garage and when I used to live in Al Ain I always had my repair work done at Mehran’s Garage in Sanaiya.  No matter where you are in the UAE you will find garages in the industrial area and if you ask around fellow expats you can work out which might be the best for your car. Dealers usually offer servicing contracts with their new cars and they can cover older cars too so it is worth asking for a quote. Note – most non-franchised garages do not do preventative maintenance so it is up to you to get a list of what needs done and checked and convey it to your mechanic!

Oil Changes

High temperatures and dust are very hard on cars and it is normal to change your oil every 5,000kms. I prefer to use Total Synethic 4×4 Oil as it is designed to be changed every 10,000kms, which is around 2 months driving for me – the guys at Al Masaood do a great job of this. Our old black patrol does under 10,000kms per year so we use Total 4×4 Oil which needs to be changed every 5,000kms – we like to change oil at least every six months!

Buying and registering Your Car

A relatively simple process – you can read about buying/registering a car here.

Selling your car

We have sold four cars whilst here – two have gone to friends, one we traded in and the other was advertised on Dubizzle.  Only the first one which we traded in had outstanding finance on it when we sold it – the dealer who bought it gave us the cash to pay off the loan, and we had to get a certificate of clearance before we could transfer the car to him (it took about 2 weeks to get this).  It is best to hang on to a car until you finish the loan payments but sometimes you have to sell sooner than expected.

It is possible to sell even financed cars privately and in this case if you do not have the cash to clear the debt yourself, often the new buyer will give you cash to clear the loan, in exchange for a cheque for the same amount from you.  You clear the loan and get the clearance, then you can change the ownership and get your cheque back.  If you disappear with the buyer’s cash then he will most likely bank the cheque and if it bounces he has the option to register a police case against you.  Another possibly safer option is for the buyer to accompany the seller to the bank, square off the loan (and insist on a clearance certificate immediately) then transfer registration immediately.

Offroading

Desert driving is a fantastic pastime and a great way to make new friends and truly explore the culture and nature of the UAE and Oman.  However there are different types of offroading so do some research before reaching for your chequebook – here are my thoughts on car choice here.

Comparison Statistics

The models chosen were the Nissan Tiida 1.6S hatchback and the Nissan Xterra 4.0s – there is a larger engined Tiida available starting at 25% more, also you can pay extra for an Xterra Offroad Edition which comes with uprated suspension, all terrain tyres, a 1.5′ lift and difflock (very handy if you are stuck in the desert).

The comparison is based on 30,000kms per year (60,000 total)

The fuel economy statistics I pulled from fueleconomydb.com – I based the comparison on “combined.”

Fuel cost is based on the current price of special which is 1.8aed per litre

For second hand cars I have estimated a generous figure for repairs at non-dealership garages.

Nissan recommend you have your new cars serviced at their dealerships and my source for the new car servicing price is Al Masaood in MZ

Insurance is normally around 5% per year.

I checked carnity.com and dubizzle.com for prices of Tiidas and Xterras on 3rd July 2016 – I have given my own best guess on the cost to buy a 5 year old car based on what looks to be good clean models with moderate mileage (up to 120,000kms) on the clock.  Similarly I have taken a guesstimate on the value of these, and also the new cars, in 2 years time, based on what is available at the moment.  Xterras have been discontinued yet they are still a very popular car so I expect them to hold their value well.  Bear in mind that when selling your car, much will depend on how well you look after your vehicle.

For the second hand examples I have factored in a set of tyres – once the original ones are five years old they will automatically fail the re-registration test.  Once they are over three years old they will fail if they have any cracking or excessive wear.

There are many other makes and models around so please do your homework before you buy!

The results:reflect approximate overall costs for the two years – depreciation, maintenance, petrol, other running costs (see downloadable tables at foot of this post)

Nissan Tiida 1.6S

Renting for 2 years: 48024aed or 2001aed per month

Buying new (financing) -38277aed or 1595aed per month

Buying new (cash) – 36549aed or 1523aed per month

Buying S/H (5 year old) – 22434aed or 935aed per month

Nissan Xterra 4.0S

Buying new (financing) – 58281aed or 2428aed per month

Buying new (cash) – 55401aed or 2308aed per month

Buying S/H (5 years old) – 42466aed or 1769aed per month.

Please note that Nissan are not sponsoring this blogpost – I don’t need any incentive to extol the benefits of Nissan ownership!

When we bought our silver LWB patrol I blogged about the experience here.

My calculation table can be downloaded here and the summary table can be downloaded here.

 

 

 

 

 

 

 

 

 

 

 

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