Money Clinic: How do I know which new car deal in the UAE is the best value?

I want to buy a new car, but am mystified by all the deals offering five-year warranties or three years' free service, free insurance, free registration and so on. I'm new to the UAE and can't work out which is really the best deal. HW, Abu Dhabi

Expert 1: Bill Carter, chief systems and innovation officer at Autodata

The first question has to be, are you buying a car or an offer? They can be vastly different. There is no point buying an offer on a car that does not suit your needs.

Assuming that you have narrowed your choice down to a few different models, and have taken a test drive I would check the following.

Look at the prices of used examples as this will give an indication as to how well they keep their value. As you correctly point out there are numerous offers in the market at present.

Is the offer so good because it is last year’s version and the dealer is clearing stock for this year’s model? While the “offer” may look good does it reflect the fact that in real terms the car is a year old and so will have lost value? Ask which model year it is and don’t be afraid to ask when the new model year will be available.

The next thing I would consider is: “how long am I going to keep the car?” If you get a “free” service plan for three years years, is that transferable if you sell the car before the end of the plan? If not, you are throwing away discount because at the end of the day all these “free” offers are a discount. If it is transferrable then you can ask more for the car when selling.

If you are offered a five-year warranty, who is providing the cover? Are all five years provided by the manufacturer or is some of it provided by the dealer? What does the “extended” portion cover? Do you have to pay and claim?

Free registration is fairly simple and will save about Dh500. Free insurance will vary depending on the cost of the car. The thing to check with this is the level of cover. Typical insurance saving on a car that costs Dh100,000 is approximately Dh3,000.

So to sum up: choose the car not the offer. If the deal seems too good to be true then it probably is. Do you really want the freebies or can you get a better discount without them? Always only buy a new car from the authorised dealer. A cheap new car from elsewhere is cheap for a reason.

There has never been a better time to buy but just make sure you do your homework.

Expert 2: Jean-Pierre Mondalek, general manager, dubizzle Motors

There are many attractive financial offers with a range of incentives being offered by car manufacturers - especially on new cars from old stock. When searching for the best deal that works for you, the total cost of ownership needs to be considered. This includes the loss in value - essentially the difference between the purchase and sale price, as well as the ongoing fuel costs, loan interest, insurance and maintenance costs. It is very important to read the fine print and truly understand the offered package in a disciplined manner to understand what is included without making assumptions. It is very easy to risk running up debts if you do not consider all aspects of the total cost of ownership and ensure that the approximate value fits in with the set budget in mind.

Saying this, the average car ownership period in the UAE is around three years, while in most developed markets that number is over five years. As a result, we are living in a gold mine for used cars, with tens of thousands listed online every month, ranging from economy to super-cars. If the budget in mind is limited by the approximate total cost of ownership calculated, then considering a verified secondhand car through a trusted source presents a viable option, and you can ultimately get more for your money.

Buying used, wisely, can offer huge savings with limited downside, particularly for cars under 18 to 24 months old as these present a good combination of savings and service/warranty coverage. These savings translate to lower monthly payments and loan interest payments if financed, but ultimately lower total cost of ownership - especially when you consider the loss in value when you decide to sell the car in the future. This also avoids the need to explore and commit to long-term finance options.

In relation to insurance, the advent of online comparison platforms provides the ability to compare policies, making it easier to understand what you are paying for and the coverage expected by the provider, away from the package deals offered by dealers on brand-new cars. My advice is to choose a package that offers the right balance of coverage without paying for non-essentials - for example car rental and Oman coverage.

Next question:

I want to buy an apartment in Dubai for Dh1.75 million but only have just over half of the Dh437,500 deposit I need saved up. Can I take out a personal loan to fund the other Dh200,000 I need? OL, Dubai

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