Buying a Car in Saudi Arabia
Although the actual driving is restricted to men, women can own their own cars and can get around by hiring a driver or having a male family member operate the car.
Standard sedans and cars can be owned by anyone, but only “families” can own vehicles that hold more than five passengers, including SUVs and four-wheel drives. Pick-up trucks are considered commercial vehicles and are reserved for Saudi national ownership only.
As with many things in Saudi Arabia, the rules are not always clear and may be bent for those with wasta (clout), or depends on the mood of the official you are working with.
Before getting bogged down in the logistics of purchasing a vehicle, there are a few terms that expats should familiarise themselves with.
Terms to know:
- Istimarah – This is the vehicle’s registration in the form of a laminated card that should be kept with the vehicle at all times. It has the owner’s name on it and the license plate of the vehicle. The Istimarah needs to be renewed every three years.
- Fahs – This is the vehicle inspection that proves it is safe and roadworthy. This is usually the round sticker found on the windshield.
- Al Morot - Traffic police. Expats doing their own paperwork when buying or selling a car will become acquainted with their local traffic police station. Take a book and be sure to pay attention to the line order.
- Exhibition – Car dealership, both new and used.
Buying a new car in Saudi Arabia
There are many reasons why an expat may want to purchase a new vehicle while in the Kingdom.
Due to the severe weather conditions in Saudi Arabia, many prefer cars that they feel they can better rely on. The extreme heat makes a functional air conditioner a necessity, and good tyres are equally important as a result of their often compromised lifespan on the extremely hot pavement. New cars can be bought at a dealership, where there is usually an English-speaking staff member available. Having the ability to purchase a vehicle under warranty from the dealer is another big draw.
Some may choose to finance their payments, and it is advised to shop around and explore the offers of different companies to find the best rates. Remember that most things are negotiable in Saudi Arabia, if dealing with the right person.
Most finance deals will include insurance payments. Expats should shop around for rates and insurance policies beforehand so they know exactly what to negotiate for.
It is important to remember that for expats who want to drive to Bahrain or other GCC countries, special written permission is needed from their sponsor and the police to take a financed vehicle out of the country, as financed vehicles are technically owned by the bank.
Of course, expats can always pay cash or take out a personal loan to buy a car, in which case, they will be the owner. Talk to different banks about the rates and best deals for securing a personal loan.
Buying a used car in Saudi Arabia
For those who prefer a used vehicle, there are many options. Used cars can be found at dealers, at one of the many car souqs, or on various websites that cater to expats and nationals. Many expats believe that buying from another expat will ensure that the car will have been kept in better condition, as expats are said to have higher maintenance standards than nationals. However, some expats may take advantage of this and charge more than the used car is worth.
For this reason, and due to the fact that there is always a risk involved when buying a used car in any country, expats should negotiate with the used car seller so that the vehicle can be brought to a mechanic of their choice who will do a physical inspection and a computerised test. It is important to find a trustworthy, competent mechanic in any country, and even more so with the harsh elements in Saudi Arabia; both natural and man-made. Ask friends and colleagues for referrals.
Saudi Arabia does not have a “Blue Book”, or standardised way of calculating car value; thus vehicles go at the market rate. It is recommended that buyers search the Internet for the car that they are interested in buying so they get an idea of a base asking price. Again, all things are up for negotiation and one can apply apply this to used-car buying. If unable to speak Arabic, take someone with who can negotiate on your behalf.
Keep in mind that in an arid climate like Saudi Arabia, cars do not rust with age and their bodies can be shiny and new-looking. However, the heat takes its toll on the less visible parts, like gaskets, hoses and belts. Always have a mechanic check these.
Ask to see maintenance records. Anyone who has bought a used car knows that being able to prove that it has been well maintained is a key buying factor. A seller knows this as well. Be wary of anyone who can’t back up their claims with paperwork. Regular oil and fluid changes are essential.
Renting a car in Saudi Arabia
For those expats unsure of how long they will be living in the Kingdom, or for those who prefer not to purchase a vehicle, there is always the option to rent a car. Car rental companies are plentiful and one can rent anything from a two-door economy car to a Hummer. Car rental companies work on a daily, weekly and monthly basis. All prices should include mandatory car insurance. As always, read this policy carefully to see what your liabilities are if involved in an accident.
Factors to consider when car buying in Saudi Arabia
Expats will be hard-pressed to find cheaper petrol anywhere else in the world. It follows that a car’s gas mileage is less a factor than in other locations when deciding on what make and model to purchase in Saudi Arabia.
A proper four-wheel drive is a good idea for expats interested in exploring the desert, as standard sedans and cars do not have the ground clearance to go over rocks or the power to drive in the sand. Any type of sedan is suitable for city driving, providing it has good tyres and, as always, good safety features.
Buyers should also consider the price of repair parts and their accessibility. American, British and German made cars typically have higher priced parts and are not as readily available if a part needs to be replaced, meaning potentially longer waiting periods. Japanese cars may or may not have higher priced parts, depending on the brand, but are thought to be more reliable and parts more readily available in the Kingdom. Some Korean car companies have well-established dealerships and parts should be readily available.
Car insurance in Saudi ArabiaCar insurance is mandatory in Saudi Arabia, and comes in two basic forms. Expats will need one of these before finalising their purchase.
Third Party Insurance
Mandatory insurance (also referred to as third party insurance) covers the damage one causes to other people or property but no repairs to one's own vehicle. Third party insurance is reasonably priced in Saudi Arabia, but note that different companies offer different amounts of coverage, so it's best to shop around.
Comprehensive insurance covers everything, including one's vehicle if there is any damage. Each company offers their own products and prices, so it is advisable to consider the options and to ask friends and colleagues for referrals - especially those who have had to use it.
Remember that a traffic accident can often find both parties in the traffic jail until the dispute is resolved - not a good time to find that one's insurance company doesn't pick up the phone on the weekend.
Furthermore, for car insurance purposes, comprehensive insurance can only be purchased for cars 10 years old or newer; thus expats ready to entertain the idea of an ancient junker should put their fantasy on the shelf or at least know that only Third Party Insurance will be an option.
Where should I buy a car?For new cars, it is best to go to a dealer. Dealers have sales during certain times of the year (like Ramadan) and can often assist in arranging a loan/lease.
Although used cars can be purchased at a dealership or at one of the car souqs, the best deals can be had through private owners. Expatriates.com is a popular site used to search for used cars, as it is in English. For those who can read Arabic (or who have a friend or colleague who is willing to help), there is Mstaml.com.
Be aware that many people may try to take advantage of newly arrived expats by selling their used car at an extremely high rate.
Many expats will leave before they’ve paid off their finance agreement and it may be possible to simply take over the payments. It often sounds like a good deal, but remember that this involves paying a new car rate for a vehicle that has already been used for a year or two. Ask if there is a balloon payment at the end and be cautious if the seller wants money to cover their deposit.
These can be good deals or a hassle. Keep in mind that the seller has had the best year or two of the car’s life while it was brand new.
Documents required when buying a carWhen purchasing a new vehicle, one would hope that the dealership would be active in taking care of the paperwork and going through the procedures on behalf of the buyer. That is, after all, one of the benefits of buying new. However, don’t assume anything and get the dealer to commit to this before buy a vehicle.
In order to buy a car as a foreigner there a number of formal documents required.
Expats must have a letter from their sponsor/employer giving permission that the purchase can be made. Most companies are used to writing such letters and know the proper format that must be used (e.g. stamps required, Iqama number must be referenced, along with title of position, and that the letter must be in English and Arabic). If the employer is not a government organisation, then the letter must be attested by the Chamber of Commerce.
To purchase a family vehicle (a car that accommodates more than five people) the letter must state that the buyer has family status as indicated on the Iqama and needs a family vehicle. Copies of all family members' Iqamas are required to buy a family car. Any permission letters (properly stamped), along with copies of all family mambers' Iqamas, plus a copy of a valid Saudi driver’s license, must be taken to the local traffic police (al Morot). They will return a letter to the buyer that gives him permission to buy the vehicle. This should be taken with to the exhibition.
Proof of insurance must be obtained and shown at the closing of the deal. Expats can look for their own company (many expats like Tawania Insurance); however, car dealerships and car exhibitions can often help with obtaining car insurance
An exhibition will then play an important (or not so) role in the purchase. It is law in the Kingdom that all used car transfers go through a third party, the exhibition. The seller will deposit the car and its Istimarah, and the buyer will deposit their money. Both will be held here until the title transfer paperwork is completed, either by the buyer or by the exhibition. If lucky, the exhibition will take a fee for moving paper and doing the legwork at the local al Morot and the buyer will need only to wait a day or so until the transfer is complete.
If the buyer does the paperwork on their own, they must take the following back to the al Morot:
- a contract for the sale of the car
- a receipt for the deposited money
- the original Istimarah card from the seller
- the original Fahs from the seller
- the letter of permission from the al Morot
- copies of their (and their family) Iqamas
- driver’s license
- proof on insurance
Make sure that everything is translated, and translated properly. If it's possible to take a friend along who can speak Arabic, all the better. If successful, the buyer will emerge with a new Istimarah with their name on it. The car is now theirs as far as the al Morot is concerned. Take this back to the exhibition and claim the vehicle.
One thing is certain, and that is the unpredictability of the system. Every person will have a different story or a slightly different procedure for obtaining their car. It is best to ask around, depending on one's circumstances and area.