Ramadan in UAE: Car buyers go for 0% finance and multi-year free insurance
Dealers make it easier for new car owners, with some even covering fuel costs too
Dubai: This Ramadan and Eid, new car buyers in the UAE are spoilt for choice with dealers loading their offers with extra incentives, whether on the auto financing side or straight cash discounts. Some offers even extend to paying for the fuel costs for a certain period…
The most popular choice among car buyers seems to be the aggressive 0% multi-year financing that’s available from car brands and their supporting banks. And the offers are what they promise – buyers can pick their choice of model and pay in interest-free instalments for periods that usually extend to three- or five years. The interest on these loans only kick in after this until such time these are paid off.
Dealers say that 0% financing deals proved quite popular in the end-of-year promotions they had running in November and December. “It didn’t matter whether it was an entry level sedan or a fairly premium SUV or EV – the zero financing worked in a market where buyers are getting extremely cautious about costs,” said the general manager at a local dealer.
Some dealers are even willing to sign off on a car purchase with minimal down payment from the buyer. Industry sources say that offers need to be seen as going the extra distance in buyers feeling there is real merit to buying now.
“We see the finance offers are having an average duration of 4.8 years and are interest-free,” said Sebastian Fuchs, Managing Director of AutoData M.E. “This gets ring-fenced by service and warranty extensions, so that the customer in many cases does not have to worry about any additional cost other than fuel, electricity and insurance for 5 years.”
In recent years, dealers have offered stretched warranties, even up to 7- and 10 years (or 1 million in kilometers run).
While these remain popular in themselves, the 0% financing and free multi-year insurance are now emerging as the major dealer giveaways to lock in the buyer.
Another year of motor insurance hikes
Potential new car buyers are specifically scouting for offers where they can drive the vehicle without worrying about paying higher insurance in a year or two. “Motor insurance premiums have in the last 12 months alone gone up by 15%-35% across the board,” said an insurance industry source.
Based on the ongoing Ramadan promotions, dealers seem to have a good idea of what their buyers want. “If it’s a 0% finance, free registration, and multi-year free insurance, then these are significant savings for the new car buyer,” said a dealer source. “This way, they are truly cushioned from any interest rate volatility and get suddenly hit with higher insurance after the first year of owning the car.”
What about discounts as Ramadan offers?
There are still straight discounts offered by some UAE dealers, but Fuchs of AutoData reckons the split is 60:40 in favour of 0% financing and other similar deals.
“We see discounts of between 10%-20% on average for new cars,” said Fuchs. “Asian and European car brands seem to favor the finance offers, whereas American brands rely more on the cash discounts.”
