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3 Key factors for assigning next car budget

3 Key factors for assigning next car budget in Dubai and UAE

As everything in life revolves around money, so deciding the fixed budget for your car buy is the number one thing that you should be doing. It’s not only to let you stay in control, but making the rest of the process streamline based on the available budget be it 10,000 or 5 Million. You need to decide the cash amount in hand as a buying kitty and then decide on how big you want to invest or rather spend. Off course I said as big because you don’t buy car everyday unless you are a dealer and hence increasing the budget has its own advantage to get you the most perfect car you need and will enjoy for the next few years. So allocate generously but definitely within your affordability parameters. People who want to take the buying kitty as a down payment only, need to also decide on how big car loan they can comfortably afford as an initial spend and for every month car loan EMI.

If you are a cash buyer, then planning is lot easier in assigning the next car buying budget is equals to whatever you saved or whatever you can afford to spend for certain number of years after the residual value of car resale value. Example: You saved 100,000 for your next car buy and plan to drive the car for 5 years. Assuming your car resale value after five years will be 40,000 (4 Most important factors impacting used car price). So if you can afford comfortably spending the 100,000 – 40,000 = 60,000 over 5 years means 12,000 per year = 1,000 per month then go for it. Remember this amount is without Car maintenance, Car Insurance, Fuel cost, registration, Salik etc.

This section is bit more complex for the car buyer who is planning to take up a car loan. As he still need to consider the above depreciation affordability and also find viability for the monthly payments. As most bank loan offer up to 80% of car value, so you should be ready with 20% cash as a down-payment. For the remaining payment EMI as a general rule of thumb, you should not exceed the below percentage of your gross monthly income depending on where you fit yourself:

  • For an average joe, for who Car is just an absolute necessity: 10% - 15%
  • Car enthusiast’s, who love Cars and want to enjoy to the max: 15% - 25%
  • Car Maniac, who is crazy about Cars and can’t live without it: 25% - 40%

Below are the 3 key factors that you must be aware of and able to factor them while allocating an appropriate car buying budget:


  • 4-5% of car value generally for all cars and all drivers
  • 5-7% of car value for sports or high performance car or new driver
  • 7-10% of car value for sports or high performance car and new driver

Car Registration, Plate Number, Salik etc: 500-600 AED

Annual Maintenance: 

  • Approx. 3-5% of car value for Japanese, Korean and American Cars within 5 years of age.
  • Approx. 5-7% of car value for Japanese, Korean and American Cars after 5 years of age.
  • Approx. 7-10% of car value for European and UK Cars within 5 years of age.
  • Approx. 10-12% of car value for European and UK Cars after 5 years of age.


Disclaimer: I have written this and all linked articles to help my friends and family and other car enthusiast’s like you. This is purely based on my own experience. If you know anything more than this I am happy to edit these articles any time. Please leave me a comment and I will accept your changes and improvise these as soon as I can.

If you like reading these articles and it helped you in anyways, please pass on the knowledge to others and use below red like to show your appreciation.

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