Having a car in the UAE seems like an unwritten rule that promises to make life easier. But consumer habits are changing with expatriates also opting to carpool or rent a car.
However, those with long-term plans to live in the UAE still opt to buy a car as a more economical option versus renting, carpooling or travelling by taxi.
Buying a car expensive in the short term, economical in the long term
Having lived in the UAE for six years now, Filipino expatriate Ana Cabisuelas decided to buy a pre-owned subcompact SUV in August 2020.
“Buying a car was always part of the plan because it makes sense if one plans to live in the UAE for long. The timing seemed right in 2020 as I got a good deal. After a lot of research, I bought a 2018 model of Nissan Kicks for Dh50,000 that would otherwise cost at least Dh80,000-90,000,” she said.
Cabisuelas made a down payment of Dh12,000 from her personal savings and pays a monthly instalment of Dh880 towards the car loan.
“It has proved to be more economical for me because earlier I used to pay roughly Dh800-1,000 on transportation. Now even though I pay slightly more monthly, in a little over three years the car will be mine as I will be loan free. Having my own car is also more convenient since it has literally halved my commute time to work and gives me more flexibility to plan my weekends.”
Ownership over usership is a better model
“Since I got my driving license a couple of years ago, I’ve been renting a car. I’d saved up enough to buy a pre-owned car last summer but that didn’t work out since I opted to do the Postgraduate Certificate in Education (PGCE), which is expensive,” shared Dubai-based Indian teacher Rosalyn Massey.
Having completed her course, Massey has again started saving consciously [approximately Dh700-1,000 per month] to buy a pre-owned car soon.
“I’m mindful that now a pre-owned hatchback comes at Dh30,000-35,000 whereas it used to cost Dh20,000-25,000 even six months earlier. Yet owning a car seems more economical even after factoring in the initial loan amount, maintenance and insurance costs. Of course, there are flipsides too. Recently, my rented car broke down and I got a replacement car very quickly. If it were my own car, I’d have to incur all associated costs plus the inconvenience.”
Owning a car seems more economical even after factoring in the initial loan amount, maintenance and insurance costs.
Currently, Massey shares her rented car with another person, therein halving the monthly rental and fuel cost. She admits that renting a car has given her a lot of flexibility.
“Although I’m largely a home body, earlier I had to consciously restrict myself from stepping out as it would mean spending a minimum of Dh500-600 on taxi per month. To make the most of one trip, I’d stay out for the whole day to complete all chores and it would often become quite hectic.”
Public transport turns out more expensive for this expat
Despite having a family car at her disposal, 20-year-old Indian expatriate Maitri Lalai, born and raised in the UAE, decided to switch to public transport. After getting her driving licence a year ago, Lalai started driving to her Sharjah-based university two to three times a week. However, within eight months of driving to the university, she started suffering from severe back pain.
“While it’s not more than a 30-minute drive to the university from Bur Dubai where I live, during peak hours there is heavy traffic in Sharjah. That meant I had to sit in the car for long, navigating through traffic and eventually it led to excruciating back pain. So, I decided to avail the university shuttle bus service even though in my case it turned out more expensive and time consuming,” Lalai shared.
I decided to avail the university shuttle bus service even though in my case it turned out more expensive and time consuming
Now Lalai spends at least one hour one way, first taking the metro and then the shuttle bus to the university, versus a total of one hour when she used to drive. Surprisingly, Lalai also pays more on transportation now since her fuel expenses were minimum as the family car is sparingly used.
Carpooling serves the purpose
For South African expatriate Yushra Mallum who has lived in the UAE for five years but doesn’t have driving license yet, carpooling has been a viable option so far. “Initially I wasn’t sure of my tenure in the UAE. But now that I’ve been here for a few years and plan to stay longer, I’m considering getting a driving licence soon.”
A schoolteacher by profession Mallum used to avail the free school bus service during her first year on the job. “It was a convenient option to go to work. But for everything else I’d have to pay a lot to travel by taxi since I live in Remraam that’s not well connected by public transport except one bus that goes to Mall of the Emirates. In a month, I’d easily end of spending a minimum of Dh500-plus on taxi,” she shared.
I’d have to pay a lot to travel by taxi since I live in Remraam that’s not well connected by public transport.
Eventually Mallum started carpooling with a few colleague-turned-friends from school. “It’s a convenient and comfortable arrangement and I feel good about not adding to the carbon footprint,” she said.
However, with rising health concerns due to the ongoing Covid-19 pandemic renting a car has become more expensive since the number of people allowed to carpool in a vehicle has reduced. Pre-pandemic five of us used to share a vehicle but 2020 onwards it reduced to three, which increased per person share of pay.
In summation, Mallum shared some advice for those who are keen to avail the carpooling option.
• Have a clear understanding with your co-passengers about their requirements and yours.
• Be flexible to adjust with each other’s timings and transport needs.
• Always a good idea to carpool with those with whom you’ve a certain level of comfort.
“I’m very fortunate to have friends with whom I’ve never had trouble or concerns so much so that over the past year or so they have accommodated me free of charge due to certain heavy and non-negotiable expenses that I had to incur elsewhere,” she concluded.
Conclusion
Although owning a car is better for the long-term, when it comes to factoring just the near-term costs, renting is comparatively better. Nevertheless, carpooling is a more economical option, but that’s not an option that works for all – but if it does, nothing like it.
When buying a car by getting a vehicle loan, monthly rent payments are generally more expensive than monthly car loan payments. But then once you are done with the payments, you are officially driving a car for years after your pay for it. The longer you drive it, the less it costs.
Renting a car has less complicated costs primarily because registration, service and maintenance costs are taken care of. A big advantage of using a rental car compared to owning one’s own car is there are no depreciation losses when renting a car.
Chauffeured rides are the simplest in terms of cost calculations and risk factors such as fines or accidents. Over the course of the year, it would seem owning a car is the right financial choice. However, for the economics to play out well, it's important to keep key cost drivers in mind.
A useful tip most experts recommended is to buy used car as a new car has a much steeper depreciation in the first year, which is the largest cost associated with owning a car.
