What a Car Actually Costs a Month in Dubai: The AED 1,361 Instalment Is Part of a AED 3,218 Number

Someone at the office was deciding between two cars last week, and the whole conversation was about one number: the monthly instalment. One car was AED 1,400 a month, the other AED 1,750, and the AED 350 gap was treated as the entire difference between them. It is not even the largest thing the decision turns on.

The company where I work runs delivery vehicles, and its accounts never treat a loan repayment as a cost. Repaying principal moves money from one side of the balance sheet to the other, so it appears in the cash flow statement and not in the profit line. What appears in the profit line is depreciation and interest. A personal car works exactly the same way, and almost nobody budgets for it that way, because the instalment is the number the bank texts every month and depreciation texts nobody.

Why the monthly instalment is not the monthly cost

Two different questions get answered by the same figure and they are not the same question.

Cash out is what leaves the account: the instalment, the fuel, the insurance, Salik, parking, the annual registration. That is the number that decides whether the month clears.

Cost is what the year consumed: depreciation, interest, and the same running lines. Principal repayment is missing from it, because buying back a piece of a car that is already owned is a transfer, not a cost. That distinction is the same one behind tracking a loan instalment properly, where only the interest slice is an expense.

For a financed car in year one, the cost number is larger than the cash number. That surprises people, and it is the reason a car can feel affordable for four years and then hand over a bill at resale.

Depreciation is the only line in a car budget that never appears on a bank statement.

What a AED 90,000 sedan costs a month in Dubai, line by line

Take a new sedan at AED 90,000, bought with the 20% minimum down payment, so AED 72,000 financed over 60 months. At a 2.69% flat rate, which is what a UAE auto loan flyer prints next to its 5.06% reducing rate, the interest is AED 9,684 across the term and the instalment is AED 1,361. Assume 15,000 km a year at 9 litres per 100 km, one Salik crossing each way on 22 working days, and a normal amount of paid parking.

Every one of those inputs is published. Special 95 is Dh3.69 a litre for September 2026, per the UAE Fuel Price Committee rates Khaleej Times listed on 31 August. RTA service 586 prices a light vehicle registration renewal at “Light vehicle (private/public) - 350 AED” plus a “Knowledge and Innovation fee: 20 AED”, with standard delivery at AED 20; Property Finder puts the mandatory Shamil test at AED 170 for a first attempt. On insurance, Hadi El Halabi of Hadi Car Insurance told Khaleej Times in June 2025 that non-agency comprehensive cover had moved from 1.5% of value during Covid to 2.5% currently, against the Central Bank’s AED 1,300 floor for a saloon. For running costs on an older car, Gulf News costed “Dh1,000 for cleaning, service, and maintenance costs” a year, which is a floor rather than an average once tyres are due.

The depreciation figure comes from Car Switch, quoted in The National: used cars “depreciate 20 to 30 per cent in the first year, 15 to 20 per cent per year for the following three to four years, and 10 to 15 per cent for every follow-on year”. Take the midpoints and the AED 90,000 car is worth about AED 67,500 after twelve months and AED 31,269 after five years. That is AED 58,731 of value gone, AED 979 a month averaged across the term, and AED 1,875 a month in year one alone.

What VAT on Salik and parking added in June 2026

Two of those lines changed this year. From 1 June 2026, 5% VAT applies to Salik tolls and Parkin fees, so a peak crossing is Dh6.30 instead of Dh6 and off-peak is Dh4.20 instead of Dh4. Parkin’s own statement, reported by The National on 22 May, said that “in co-ordination with relevant government authorities and applicable UAE tax regulations, from June 1, VAT at 5 per cent will be applied to all parking services provided by Parkin”.

Individually it is small. Across 44 crossings a month it is AED 13, and across a year AED 158. The parking side compounds a larger change already in place: Parkin’s own market disclosure, reported by Khaleej Times, put the weighted average Dubai parking cost at “Dh3.03 per hour” in Q3 2025, up from Dh2.01 a year earlier, a 51% rise driven by the variable tariff introduced in April 2025.

Some commutes feel it much harder than a table does. Maroun Farah, a PR consultant driving to Abu Dhabi, told Khaleej Times in June that “when fuel, Salik and toll charges are combined, we are now spending around Dh2,200 a month compared to roughly Dh1,500 before”. That is one household’s route, not a benchmark, but it is the right reminder that Salik and fuel are the two lines a change of address or job can double overnight.

Why the cheapest years of a car are the ones after the loan ends

Run the same car to year five and the arithmetic inverts. Depreciation has fallen to about AED 553 a month, the interest is nearly gone, and the total cost is around AED 1,700. Run it into year six, with the loan finished, and cash out drops to roughly AED 1,130 a month while the cost sits near AED 1,450. The expensive part of car ownership is front-loaded and it is not the loan.

Across the full five years, the AED 90,000 sedan consumes about AED 135,000: AED 58,731 of depreciation, AED 9,684 of interest, and roughly AED 67,000 of running costs. Over 75,000 km that is AED 1.80 per kilometre. The litre price everyone watches on the last day of the month is Dh3.69, and fuel is the second largest line on the list, at under a quarter of the first.

None of this says a cheaper car is the right answer, or that the AED 350 gap between two instalments does not matter. It says the gap is a small part of a number worth calculating before signing. Build the eight lines once in a spreadsheet, or as a recurring set of categories in whatever tracker is in use, and the car stops being one instalment and becomes what it actually is, which is the second largest fixed cost in most UAE households after rent.