Have you done the maths on what it costs to buy a luxury car?
For most UAE residents, their two biggest expenses are their car and house. This makes sense, as they are two of the largest single purchases you can make, plus they have many repeating costs as well.
For cars, the monthly payment is only the beginning. You still have petrol, insurance, maintenance, repairs, registration and parking to consider, as well as any speeding or parking fines. Plus the UAE has a huge luxury car culture, with every other vehicle on the road either a BMW, Mercedes or RollsRoyce. This means many residents move here and then buy the fancy car they’ve always dreamt of because they can finally afford it, but there are huge financial consequences to that decision.
If you don’t believe me, track how much you spend on your car for a month or two. Apps such as Spending Tracker are free and take about 10 seconds to use after you make a purchase. You can only make a rational decision on how much something costs if you have all the information, and without knowing the actual amount you spend, you don’t have that information.
For me, I average about Dh2,000 a month on my car, and I’m only driving a 2016 Nissan. If you’re driving a luxury brand, I’ll bet you easily double or triple that number. If you’re thinking about purchasing a high-end vehicle, be aware of how much of your salary it will eat up. Can you afford to spend an extra Dh4,000 to Dh6,000 on transportation? Could that money go somewhere else that benefits you, such as invested into stocks or real estate, assets that generate wealth instead of draining it?
For the first eight months of living in Dubai, I did not own a car. I was lucky that my apartment was just a two-minute walk away from my workplace. I took the metro everywhere else, as I live near a stop as well. For the rare occasions I needed it, I took a taxi. Not only did I spend a fifth of what I now spend on transportation, I also lost weight because of my less sedentary lifestyle. This is consistent with findings from the American Heart Association that shows people who consistently take public transportation have lower rates of obesity, heart disease, diabetes and unhealthy blood pressure.
Then a friend of mine was moving and needed to sell her car. I was getting more gigs with my band and needed a convenient way to get my instrument and myself on time to bookings all over the UAE, and a car was required. The following year, I landed a new job in a part of town I did not want to live. So I needed a car that could function as a daily commute; newer, more reliable and with a better sound system.
It was also more than three times as expensive as the first car, with the increased costs that went with that as well – such as the service plan and higher insurance. So if you are trying to decide whether to buy a car, or what car to get, consider the following:
1. Can I move closer to work and either walk or drive less?
2. Can I use public transportation more? What about concepts, such as ekar, where you share a car using an app?
3. How much will the full total costs be? Do I really want to spend that much?
4. Should I really spend so much money on a car that is just going to lose value as soon as I drive it out of the showroom?
You might still buy the car after you answer these questions – I did, even if I often regret it – but at least you’re making an informed decision that is right for you.