For residents, owning a car in the UAE is often seen as essential. However, some are locked out of traditional finance, while others may struggle to come up with the down payment required for a bank loan, particularly new residents, freelancers, and young professionals.
A growing model is offering an alternative path to car ownership: Rent- and lease-to-own programmes. Instead of requiring a down payment or bank loan, customers pay a fixed monthly fee that covers everything from insurance and maintenance to registration. At the end of the lease, they can choose to purchase the car at a pre-agreed price or simply return it.
How rent- and lease-to-own works
Unlike traditional rentals, which are short-term with no ownership option, these programmes allow customers to eventually own the vehicle after a fixed lease period. Loans typically require a 20 per cent upfront payment and carry 3–5 per cent annual interest. In rent-to-own schemes, there’s no down payment, interest, finance charges, or processing fees.
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In an interview with Khaleej Times, Rahul Singh, Managing Director of Thrifty Car Rental — which launched its own lease-to-own programme recently — explained: “A customer who has recently moved to the UAE and needs a reliable car for daily use might find traditional financing challenging due to… down payments, lengthy loan terms, and fluctuating interest rates.
“Our lease-to-own programme offers maximum flexibility and a hassle-free experience. Customers benefit from bundled monthly payments that cover insurance, registration, and maintenance — all upfront. At lease-end, they can either purchase the car at a pre-agreed price or return it.”
Marwan Almulla, General Manager of Dollar Car Rental — which is another company that launched a rent-to-own scheme recently — said traditional car financing requires the buyer to commit to long-term loan repayments and a ‘substantial’ down payment.
“Dollar’s rent-to-own model allows customers to lease a vehicle for a term ranging from 12 to 60 months. At the end of the lease, customers have the option to buy the car by paying a pre-agreed lump sum,” he explained. “The lease includes an annual mileage allowance of up to 30,000km, with flexibility to increase if needed. After the lease term ends, if the customer decides to keep the car, they pay the agreed lump sum to own it. If not, they can return the vehicle without any penalties.”
Pre-agreed purchase value
A key feature in such schemes is the upfront agreement on the vehicle’s buyout price at lease-end. This figure is calculated based on expected depreciation, lease term, and other factors.
“The final purchase amount is decided right at the start of the lease, in consultation with the customer. This means everything is clear from day one, with no surprises down the line,” said Almulla.
This amount is not covered in the monthly instalments paid during the lease period. Instead, it’s a one-time lump sum, due only if the customer decides to go ahead and buy the car at the end of their lease.
“What really works in the customer’s favour is that the future purchase price is locked in from the beginning. So even if market prices fluctuate or the car depreciates over time, the amount they’ll pay won’t change,” Almulla added.
According to Singh, the value depends on the make and model of the vehicle and projected market conditions at the end of the lease.
Post-lease period
Once a customer becomes the owner of the car, they are responsible for maintenance, insurance renewals, and repairs.
“All these services that were bundled with the lease will no longer be available as part of the offering,” said Singh.
Almulla added, “However, for those who’d like to continue with the convenience they’ve gotten used to, we do offer extended service packages that can be purchased separately. So while the full-service experience is part of the lease, post-ownership support is available for those who want to keep that peace of mind going.”
Eligibility, restrictions for rent-to-own
The rent-to-own schemes target UAE citizens and expatriates. Eligibility mainly comes down to providing valid proof of income and undergoing a basic risk assessment.
Proof of income is required for all applicants. “We aim to keep the model as inclusive as possible, but verifying income helps us assess affordability and make sure customers aren’t overextending themselves,” said Singh.
The companies also run a credit check through Al Etihad Credit Bureau. “This helps us manage risk and maintain a healthy lease portfolio. That said, we’re not as rigid as traditional lenders, and our goal is to offer more flexibility while still maintaining the right level of due diligence.”
Growth and projections
Dollar has dedicated about 25 per cent of its fleet to the rent-to-own offering, with this share “set to grow as awareness picks up across the region”.
“We expect that around 20 per cent of customers who currently go through traditional bank financing will make the switch to rent-to-own over the next two to four years. More and more first-time car buyers and self-employed individuals are looking for flexible, affordable alternatives to conventional auto loans, and this model fits those needs really well,” said Almulla.
For their projections, the rental companies have factored in broader economic trends, such as rising interest rates, inflation, and tighter lending requirements from banks.
Singh said customers using Thrifty’s lease-to-own service report saving around 5–15 per cent annually compared to traditional financing. “Over the next two years, we expect adoption to increase substantially. Our projections reflect a broader shift in car ownership behaviour in the region, driven by the flexibility and bundled benefits this model delivers.”
Sahim Salim
Staff Writer
As Associate Editor, Sahim Salim helps tell the UAE story like no one else does — and leads a team of reporters that asks the questions to get news and headlines that matter.
www.khaleejtimes.com (Article Sourced Website)
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