Frequently asked questions

The monthly repayment on a car loan is just one part of the cost, which at first might appear cheaper. Remember, there’s a also a large upfront cost, which includes a down-payment (typically 20% of the car price), interest payable on the loan (approx 4% per year), insurance for the year, registration fees, as well as ongoing servicing costs and the high cost of up to 25% depreciation of the car value in just the first year alone. With a Carasti car subscription, we don’t ask for any down-payment, so you can access a brand new car without this large upfront cost; you don’t have the risk of being locked into a 4-year car loan; and all our rates are inclusive of insurance, registration, servicing etc, which are already competitively negotiated by us with our suppliers.

That’s true, buying a used car vs new is cheaper but you’re still locked into a 4 year loan and once you’ve fully paid off the loan we’ll be in 2027. By that point, petrol cars will have depreciated even further due to electric cars flooding the market and being better value, so the residual value on your petrol car will be even lower. In the meantime, you’re driving an older car that will likely cost you more in unexpected maintenance/repairs as it ages. That’s true, buying a used car vs new is cheaper but you’re still locked into a 4 year loan and once you’ve fully paid off the loan we’ll be in 2027. By that point, petrol cars will have depreciated even further due to electric cars flooding the market and being better value, so the residual value on your petrol car will be even lower. In the meantime, you’re driving an older car that will likely cost you more in unexpected maintenance/repairs as it ages. However, buying a used car today also means paying over the odds for it due to the semiconductor shortage that has negatively impacted the production of new cars by 60%. Due to simple supply/demand, this means more people are looking for used cars today and it’s expected you’ll ultimately face higher depreciation within the next 18 to 24 months as production of new cars normalises. A car subscription gives you a white glove service, so whatever happens to the car we take care of it, no additional depreciation risk, no downtime if it breaks down as we provide instant replacement cars and most importantly a fixed monthly subscription fee with no surprises, no matter what.

The automotive market is going through a major transformation from petrol cars to Electric Vehicles (EVs). We truly believe that it does not make sense to buy a petrol car now, as the residual value (ie. the car value at the end of the loan period) is expected to drop hugely in the coming years due to the transition to EVs and there is little demand left for petrol cars (right at that time you decide to sell it!) We don’t want our customers to be negatively affected by this transition in the future, by being left with a less desirable car that is worth much less at the end of the loan. This is why we do not offer lease-to-own / subscribe-to-own and another reason why we offer shorter terms on our leases (12-24 months); our customers will have the flexibility to upgrade their car for a brand new one regularly as the market evolves (and to an EV when the time is right for them!)

This is true, however, it’s really a temporary supply/demand effect, due to the global shortage of semiconductors slowing car production numbers (60% lower than forecasted over the past 2 years) and we’re still suffering the impact of that today, with waiting lists even on economy cars of 6 months. Once production levels recover towards the end of this year, used car prices will start to normalise.

The issue with this is that you will own a car which is not desirable after this period, as the residual values on petrol cars are going to significantly drop in the coming years as supply of new cars normalises and EVs take the lead in terms of sales. Petrol cars will be less desirable as everyone will be buying EVs, and most car manufacturers will be mainly producing and selling EVs too given major governments across the world have banned the sale of petrol cars from 2030 onwards. Based on the acceleration of EV adoption seen already, we predict up to 80% loss in value on a new petrol car in the next 4 years as adoption of EVs fills the mass market.

Unfortunately even buying EVs won’t avoid this as technology is evolving so fast, especially on the EV front. Just last year a range of 300km was normal for EVs and now 600km is the norm. In a few months Mercedes is launching an EV with a 1000 km range. Who’s going to want to buy an outdated car and what will happen to its value? Especially while EVs are more expensive than petrol cars, subscribing to an EV on a 12-24 lease means you can still drive the car you want now, with the ability to upgrade to a new EV at the end of the lease. By this time, EVs will have advanced immensely in terms of technology, driving range, variety of cars available and because of this lower prices.

If I told you today you could invest in a company that after 4 years your investment would for sure will be worth 60% less, would you do it? I guess not, this is exactly what you’re doing when buying a car: it’s a depreciating asset and one of the worst investments out there! Now, this is not at all financial advice, but for example let’s say you’re planning to buy a AED 100,000 car with a 4 year loan. If you instead invested the equivalent of the 20% down-payment (ie AED 20,000) into the stock market for 4 years (which on average grows 7% per year), your investment would be worth AED 26,216. Whereas the AED 20,000 invested in a down-payment will effectively be wiped out in the first year of depreciation alone. Also, if you take out debt to buy a car that means you have less capacity available to get a mortgage for buying your first home, second home, third home or another holiday home! We have wealthy customers with Carasti, who could buy their cars outright. However, they have multiple cars all on a Carasti subscription simply because they know their money is better invested elsewhere!