New car ownership is a really important milestone for some people. In addition to contributing to the owner’s pride, there is a certain level of comfort in driving a new car with servicing and powertrain under warranty from the manufacturer for a period of time. However, it is important to keep in mind the different costs associated with purchasing a new automobile.
Below is a simple breakdown of the most important costs associated with owning a new 2014 Toyota Corolla. The price for the Corolla is AED 60,000 as advertised by the dealership. The assumed loan period would be 60 months:
|20% down payment (one-time payment)
|RTA Car Registration (one-time yearly payment)
|Salik Registration (initial payment)
|Total Initial Payment
|Installments (monthly; including interest)
|Fuel Consumption (4 full tanks per month)
|Salik Top Up (monthly)
|Total Monthly Cost
|Total Yearly Cost (not including initial payments)
For an economical car such as the Toyota Corolla, the monthly cost is not that steep. It is important to keep these figures in mind however and to also note that insurance costs vary. When budgeting for the year, it is worthwhile to make a similar chart using the relevant pricing and coming up with all cost factors to see if it is the right decision. Quite often people forget that there is a 20% down payment, which skews the first payment on the car significantly and requires the buyer to usually save ahead in preparation.
Fuel consumption and Salik top up can also raise the monthly cost of owning a car, depending on the amount of driving the car owner does and the routes that are used. Fuel consumption could vary depending on the proximity of the car owner from work. A full tank of petrol per week is a good average barometer to use. In the case of Salik charges, the ceiling of AED 24 per day was recently removed. This can also skew the monthly cost if the car owner uses Sheikh Zayed Road as opposed to the alternative routes which do not charge salik.
Shopping around for the best interest rate offered by banks is also a good way to save some money. bayzat is a great tool to compare interest rates for new car loans.
Some car manufacturers offer periods of 0% interest on their cars which is a great time to think about buying a car. Keeping an eye out for these offers can save the consumer a significant amount of money. During Ramadan, car manufacturers have great offers some of which include free car registration, free insurance for a year, an iPad or TV with each purchase or similar offers.
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