Lease or buy your
next UAE car?

Leasing a car in the UAE looks cheaper month to month — often AED 2,000–3,000/month with little upfront — but buying frequently wins over 4+ years, because when you own the car you recover its resale value at the end. The honest comparison is total cost of ownership. For buying, that is the car price plus loan interest plus a flat AED 520/year registration plus insurance (~3%/year of value) plus maintenance, − the resale value you get back. For leasing, it is the initial payment plus every monthly payment plus any excess-mileage fee. This calculator computes both totals from your own numbers and tells you which is genuinely cheaper for your case. UAE-focused throughout, from a runabout to a large SUV.

Lease vs buy: it's about total cost, not the monthly payment

Ask most people whether to lease or buy and they answer with the monthly payment: leasing is “AED 2,500 a month”, financing is “AED 2,800 a month”, so leasing wins. That is the wrong number to fixate on. The monthly figure tells you what leaves your account each month, but it says nothing about what the car costs you in total over the years you actually keep it. Two options with almost identical monthly payments can differ by tens of thousands of dirhams once the full life of the decision plays out — and the gap runs in the buyer’s favour far more often than the sticker payment suggests.

The reason is that the monthly payment hides where the money goes and, crucially, hides what comes back. When you buy, your total cost is the car price plus the loan interest you pay to finance it, plus a flat annual registration fee, plus insurance and maintenance while you own it — and then, at the end, you sell the car and get a chunk of your money back as its resale value. That resale recovery is the whole point of ownership, and the monthly payment never shows it. When you lease, your total cost is simpler and more visible: the initial payment you put down, plus every monthly payment across the term, plus any excess-mileage fee if you drive further than the contract allows. You never own the car, so there is nothing to sell and nothing to recover at the end.

Net buy cost AED 126,241 vs total lease cost AED 135,000 for the same car and period — buying is cheaper here by AED 8,759. Registration is a flat annual RTA fee charged for every year you own the car, not a percentage of car value. Excludes fuel, Salik and parking (the same either way).

The table above itemises the buy side for a reference AED 150,000 car kept four years, so you can see how each cost stacks and how much resale value claws back. The calculator does exactly this: it builds the full buy total, subtracts the resale value to get a net buy cost, builds the full lease total, and puts the two head to head. Whichever is lower wins, and it tells you by how much. Everything that follows — depreciation, the individual buy costs, the lease costs and the mileage trap — is really just an unpacking of the two totals this section compares.

Depreciation: the biggest cost of owning

If you own a car, the largest single amount it costs you is not fuel, not insurance and not servicing — it is depreciation, the value the car quietly loses just by getting older and being driven. A new car in the UAE typically sheds around 15–20% of its value in the first year alone, then a further 10–15% every year after that. It is an invisible cost because no one hands you a bill for it; you only feel it on the day you sell and discover the car is worth far less than you paid.

The calculator models this with a steady 17%/year compound depreciation curve, which sits sensibly in the middle of that real-world band. Applied to a AED 150,000 car, the maths is stark: after one year it is worth about AED 124,500, after two about AED 103,000, after three about AED 85,700, and after four years roughly AED 71,000. That is a loss of about AED 79,000 in four years — more than half the purchase price gone, and comfortably the biggest number in the entire ownership calculation. Compound, not straight-line, matters here: each year’s loss is 17% of a smaller base, so the fall is steepest early and gentler later, which is why the first year hurts most.

This is the cost leasing lets you sidestep entirely. When you lease, you never own the depreciating asset, so its plunge in value is the lessor’s problem, not yours — you simply hand the car back at the end. That is a genuine argument in leasing’s favour, and it is why the case for leasing is strongest on cars that depreciate fast or over short horizons where the early, steepest losses dominate. But there is a vital counterweight the buyer enjoys: that AED 79,000 loss is partly recovered as resale value when you sell. The car may have lost value, but it is still worth about AED 71,000, and that AED 71,000 comes straight back to you. This is exactly why buying’s net cost is so much lower than its headline cost first looks — the calculator subtracts the resale value the owner recovers, and depreciation only bites for the portion you do not get back.

What buying really costs: interest, registration, insurance, maintenance

Set depreciation aside and the buy side still has four running costs to account for, and the calculator models each one explicitly. Understanding them is what separates a rough guess from a real total.

Loan interest is usually the second-largest cost after depreciation. Unless you pay cash, you finance the car price minus your down payment, and you pay interest on that borrowed balance over the loan term. UAE auto-loan rates typically run around 2.5–5%, and the tool uses standard amortization — the same declining-balance method your bank uses — so the interest reflects a real repayment schedule rather than a flat approximation. A larger down payment or a shorter term cuts the interest; a longer term lowers the monthly payment but raises the total interest you hand the bank. This is the one buy cost you can most directly shrink through the terms you negotiate.

Registration is a flat annual fee, and this is where a lot of online estimates go wrong. Dubai vehicle registration is a fixed yearly charge of AED 520 for a private light vehicle, and it is a sum of three fees the RTA publishes separately — AED 350 ownership renewal + AED 20 Knowledge and Innovation + AED 150 technical inspection — not one opaque number. Across the private vehicle classes the RTA schedules span about AED 320–1,220. It is not a percentage of the car’s value. A AED 60,000 hatchback and a AED 300,000 SUV pay essentially the same registration. The calculator applies this as a flat AED 520/year, charged once for every year you keep the car, so over a four-year hold it adds AED 2,080 rather than a single renewal. It barely moves the total either way — but it is a real recurring cost, and treating it as a percentage of value (an old and common error) badly overstates the buy side.

Insurance is modelled at about 3% of the car’s value per year for comprehensive cover, switched on or off in the tool. On a AED 150,000 car that is roughly AED 4,500 a year; premiums fall as the car ages and its value drops, but 3% of value is a fair planning rate. Maintenance is modelled at a flat AED 4,000/year — servicing, tyres, brakes, wear items and the odd repair — also toggleable. New cars under warranty cost less early and more later, so a flat annual figure is a reasonable average across a few years of ownership.

One honest boundary: fuel, Salik tolls and parking are real costs of running a car, but they are broadly the same whether you lease or buy the same vehicle, so they sit outside this comparison. The calculator does not model them — they would cancel out on both sides of a like-for-like lease-versus-buy decision, and folding them in would only add noise to the number that actually differs.

What leasing really costs: initial, monthly & mileage

Leasing’s total cost is more visible than buying’s, which is part of its appeal — there is no depreciation to model and no resale to guess, just a small set of payments you can see clearly upfront. The calculator builds the lease total from three pieces.

First, the initial payment: the deposit or first instalments a lessor asks for at the start. It is usually modest compared with a car purchase’s down payment — a few thousand dirhams rather than tens of thousands — which is exactly why leasing feels light on the wallet at the outset and why it suits people who do not want to sink capital into a car. Second, the monthly payment × the term: a fixed amount every month for the full length of the lease. A typical UAE personal lease runs something like AED 2,000–3,000/month, and because it is fixed it is genuinely predictable — and it usually bundles insurance, maintenance and registration into the single figure, so you are not writing separate cheques for servicing or renewal the way an owner does. That all-in simplicity is a real, non-financial benefit: one payment, no surprises, no admin.

Third, and easily overlooked, the excess-mileage fee. Every lease includes a mileage allowance — the tool assumes the common 15,000 km/year — and if you drive further, you are billed for every extra kilometre. The calculator charges AED 1/km for any distance above 15,000 km/year across the whole term. Stay within the cap and this is zero; blow past it and it can quietly become one of the biggest line items on the lease, which is why the next section looks at it in its own right. Add the initial payment, the monthly payments across the term and any excess-mileage fee together and you have the total lease cost the calculator compares against the net buy cost.

Same AED 150,000 car and AED 2,500/mo lease at every horizon. At this lease price buying is cheaper at every point — and its edge widens the longer you keep the car and the more resale value you recover. A cheaper monthly lease would let leasing win at the shortest terms; your own lease quote, mileage and interest rate move the break-even point.

The table above lines up buying against leasing across several ownership horizons, so you can see how the verdict shifts with time. At the AED 2,500/month lease shown, buying is cheaper throughout and its edge widens the longer you keep the car and the more resale value you recover; at a lower monthly lease, leasing would lead over the first couple of years before buying overtakes it. Where exactly the lines cross depends on your specific price, rates and mileage — which is what the calculator works out for your own numbers.

Mileage caps and who they hurt

The mileage cap is the single feature of a lease most likely to blindside you, because it turns a fixed, predictable monthly cost into a variable one that depends entirely on how far you drive. A standard UAE lease bundles an allowance of around 15,000 km/year into the payment. Drive less and you have simply paid for kilometres you did not use; drive more and you owe an excess charge on every kilometre over the line — AED 1/km in the calculator’s model.

For an average commuter, 15,000 km/year is comfortable: a daily drive to work across Dubai or between emirates, weekend errands and the occasional trip usually lands inside it. For a high-mileage driver, it is a trap. Consider someone covering 25,000 km/year — a long inter-emirate commute, say Abu Dhabi to Dubai and back, or a job that keeps them on the road. That is 10,000 km over the allowance every year. On a four-year lease, that is 40,000 excess kilometres at AED 1/km — an extra AED 40,000 on top of the quoted payments. A charge that size can wipe out leasing’s entire month-to-month advantage and then some, turning the “cheaper” option into the dearer one.

The lesson is blunt: leasing’s headline economics assume you drive roughly the allowance. If you are a genuinely high-mileage driver, leasing usually stops making sense and buying becomes the better call — an owned car has no mileage penalty, though heavy use does depress its resale value somewhat. The calculator makes this visible by adding the excess-mileage fee straight onto the lease total, so a high annual distance shows up as a real, quantified cost rather than a nasty surprise at the end of the contract. Enter your honest yearly mileage, not an optimistic one, and let the fee land where it belongs.

When leasing wins and when buying wins

Neither option is universally right — the honest answer depends on your horizon, your mileage and what you value, and the calculator’s net-cost-versus-total-cost comparison is built to give you the number for your own case rather than a slogan. Still, clear patterns emerge.

Leasing tends to win when your time frame is short. Over two to three years, the buyer is absorbing the steepest, front-loaded years of depreciation without yet recovering much resale value, while the lessor has simply made a handful of predictable payments. Leasing also suits an uncertain UAE stay — if you might leave the country in a year or two, tying up capital in a car you then have to sell in a hurry is a poor bet, whereas a lease just ends. It fits people who like to drive a new car every couple of years, and those who value predictable, all-in payments with insurance, servicing and registration bundled and no resale-value gamble at the end. Low, within-cap mileage is the final condition — leasing’s numbers assume you stay under the allowance.

Buying tends to win when you keep the car four years or more. By then the resale value you recover has grown large relative to the depreciation you have suffered, the loan may be paid off, and the net cost of ownership drops below what an equivalent lease would have cost over the same span. Buying is also the clear choice for high-mileage drivers, who would haemorrhage money on excess-mileage fees under a lease, and for anyone who simply wants to recover the car’s resale value rather than hand the vehicle back with nothing to show. The through-line is ownership economics: the longer you hold and the more you drive, the more buying’s resale recovery and lack of mileage penalty tilt the total in its favour. Put your real horizon, price, rate and mileage into the calculator and it will tell you which side of that line you fall on, and by how many dirhams.

A worked AED 150,000 example

A single worked case makes the whole comparison concrete. Take a mainstream AED 150,000 car, kept four years, and run both options through the calculator’s own model so the figures tie out exactly. On the buy side, assume 20% down (AED 30,000), a four-year loan at 4.5%, with insurance and maintenance both switched on.

Put the two side by side: net buy cost AED 126,241 against total lease cost AED 135,000. Buying is cheaper by AED 135,000 − AED 126,241 = AED 8,759 — about 6.5% of the lease cost. The whole difference comes from the resale value the owner recovers: strip that AED 71,187 out and leasing would have looked far cheaper, exactly as the low monthly payment implies. This is the trap the first section warned about, made numerical — and change any input (price, down payment, rate, years or mileage) and the calculator redoes this same arithmetic and re-declares the winner instantly.

Method, sources & honest limits

This calculator is explicit about how it reaches its verdict. On the buy side it sums five things: amortized loan interest on the car price minus your down payment over the loan term (standard declining-balance method, UAE auto rates typically 2.5–5%); a flat AED 520/year RTA registration fee, charged for each year of the holding period — a fixed annual charge, never a percentage of the car’s value and never a one-off; insurance at 3%/year of value when switched on; maintenance at AED 4,000/year when switched on; and resale value from 17%/year compound depreciation. The net buy cost is every one of those costs added up, then the resale value subtracted — because that is money the owner genuinely gets back.

On the lease side it sums the initial payment, the monthly payment × term × 12 months, and an excess-mileage fee of AED 1/km for any distance above the 15,000 km/year allowance across the term. The verdict compares the net buy cost against the total lease cost and reports whichever is lower as the cheaper option, along with the dirham saving. The 17%/year depreciation rate, the AED 520/year registration, the 3% insurance rate, the AED 4,000 maintenance figure, the 15,000 km/year allowance and the AED 1/km excess rate are all UAE-typical planning defaults consistent with RTA fees and prevailing market rates.

Three honest limits. First, this is a planning estimate, not a quote: real prices, interest rates, insurance premiums, depreciation and lease terms vary by car, bank, insurer and dealer, so confirm your specifics before committing. Second, it deliberately excludes fuel, Salik tolls and parking — those are broadly the same whether you lease or buy the same car, so they cancel out of a like-for-like comparison — and it does not model lease wear-and-tear charges. Third, this is a UAE-focused planning tool, not financial advice. Content last verified July 2026.

Car lease vs buy in the UAE — frequently asked questions