With so many of the latest automobiles available in the UAE, buying a new car can be a daunting and expensive task. The country's used car segment is a worthwhile alternative for those who have less to spend. As with servicing and maintenance facilities, finance options for used cars are also specialised.
Michael Brightmore, General Manager, Al-Futtaim Automall, says, "The cost of money for most major banks is similar and therefore the cost of loans they offer customers is also similar. Low rate offers are made from time to time by banks usually operating through specific dealerships and these can be attractive to customers as it creates additional discounts on their vehicle purchases. Dealerships with a tie-up to a specific bank can often negotiate preferential rates for their customers and so it is always advisable for customers to ask about the rates and offers given at the showroom.
Distinct advantages
"Taking advantage of bank and showroom tie-ups can also have two other distinct advantages for a customer. Firstly, convenience, as the often-cumbersome paper trail is usually fast and streamlined. Secondly, utilising an alternative source rather than the customer's own bank leaves that line of credit open for any future needs."
Dealers and lenders offer a variety of loan terms and payment schedules for those opting for a used car. However it is always advisable to compare offers and negotiate for the best deals.
Jeremy Weatherill, Divisional Manager of Swaidan Automobiles, the official Peugeot importer in the UAE, says, "There are no standard rates of interest on used cars. It varies dramatically depending on several factors, the first being the type of car being purchased (a sports car or a sedan, for example), the age of the car — the length of time that the car has been driven should generally be more than one year. Finally the amount of deposit and status of the bank account helps the lender determine the risk and the interest rate on the vehicle."
He adds, "On higher-rated cars, a personal loan may work out cheaper over a short period as against an auto loan. In this way car buyers can effectively pay cash for the car as it is not mortgaged to the bank."
Economical means
Brightmore says, "Used car purchases the world over are an economical means of owning the car one really wants, at a price one can afford. In comparison, new car purchases are often dictated by one's budget. With a used car, one does not need to compromise on what one really wants, one can use 'age and condition' as a way of fitting one's dream car to one's budget."
"The used car market continues to grow and, as with increased inflation in the form of higher house rentals, school fees and food prices, the demand for good quality used cars is likely to become an increasingly attractive proposition for many people who would have bought brand new vehicles in the past," says Weatherill.
Brightmore adds, "While using the 'age' and 'condition' cost-saving method, there are other considerations when buying a used car that one wouldn't necessarily need to make when buying a new vehicle. These include just how old and in what condition one is willing to accept a vehicle. This is where particular care and attention is needed. Unless one is a first-rate motor mechanic, with access to worldwide service histories, they would need assistance. The single most important part of a used car purchase is not the car itself, but whom it is being bought from. Private purchases or purchases from unknown, small traders are fraught with risks which all too often cause future expenses well beyond any initial saving that may have been seen. It is far better to use the services of a respected dealership, which has a clear policy on vehicle quality and service standards for their customers."
Risky business
He cautions, "There has been a worrying increase in the number of non-UAE-original used vehicles being imported and sold in the market. Residents should be aware of the huge risk in buying these cars. Far too many vehicles have serious problems with their history, with major accidents, poor repairs and mileage tampering, which is almost impossible to track. Stick to vehicles with UAE specifications brought into this country by authorised distributors."
