Rent or buy a car? The wrong decision will cost you thousands

February 16, 2018 7:00 am

For those who have recently landed in Dubai, or are long time residents feeling the pain of rising costs, comparing the advantages of owning a car, renting or opting for chauffeured services in the UAE, is quite a common practice when considering the options.

The experts at have crunched some numbers to bring some insightful findings.

To explore each option, chauffeured ride apps were selected; and, to keep the comparisons fair and consistent, a Lexus ES300 in each option was chosen so that similar driving experiences are considered.

Finally, the results were determined by assuming daily commutes come down to an average of two 30 km trips a day, 6 days a week, so hitting an average of 20,000 kms a year with half of them crossing a Salik gate.

Owning a mid-size mass luxury sedan such as a Lexus ES 350 costs approximately AED 35,000-40,000 per year.

Related: No more sleeping at the wheel: There’s no wheel in fully driverless cars!

The individual costs that follow include;

– AED 25,000-30,000 in car depreciation as ultimately the car will lose quite a bit of value over its lifetime

– AED 3,000-4,000 for comprehensive insurance

– AED 1,000 in registration related costs such as the annual inspection fees

– AED 2,750-3,250 for cleaning, service, and maintenance costs

– AED 4,000-5,000 in Salik and fuel costs assuming January’s ~2 AED per liter and an average consumption of 9 liter / 100 kms for the Lexus ES350


Renting the same type has less complicated costs primarily because registration, service and maintenance costs are taken care of and it adds up to about AED 60,000-65,000 per year. Namely:

– AED 55,000-60,000 per year in rental cost, as monthly rates are typically AED 5,000-6,000 due to seasonal peaks and slumps and most agencies provide discounts on longer term commitments

– AED 4,000-5,000 in Salik and fuel costs which are similar to that of owning a car

Chauffeured rides are the simplest in terms of cost calculations and risk factors such as fines or accidents.

Read this: ‘In 20 years, we won’t even be allowed to drive ourselves’

Associated costs add up to a grand total of AED 45,000 per year, assuming an average base fare of AED 8 on top of AED 2 per kilometer as the rates vary on time and demand.

An added perk is being chauffeured around without the headache of driving yourself.

Choices Choices

Therefore, 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 these key cost drivers in mind:

– It is recommended 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

– The car must be in good condition to avoid unanticipated repairs which could turn out to be costly

– The timeframe needs to be close to a year or more. Should you only need a car for a few months, owning becomes costlier.

CarSwitch’s value proposition is to tackle the two critical cost advantages of owning a car: it needs to be a used car, so that VAT and the big initial depreciation can be avoided, and it needs to be in good condition.

Accordingly, CarSwitch pre-inspects every car, puts the results on their website, and adds a warranty to every car so that the economics always play out well.

Stop being a VAT victim! Watch this video to never pay 5% ever again

Who is CarSwitch? 

Founded in 2016, CarSwitch is the UAE’s latest technology platform providing an innovative customer-centric service that completely reinvents the painful process of buying or selling used cars.

CarSwitch offers buyers and sellers better prices through direct seller-to- buyer deals, complete transparency and peace of mind through a proprietary 200-point inspection and guaranteed warranty for every car, and a completely hassle-free experience by taking care of every step of the process.


Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.