Monthly car rentals remain a popular alternative to owning a vehicle in the United Arab Emirates because they offer flexibility without long-term liability. In 2025 this convenience comes with new rules. A landmark Federal Decree Law on Traffic Regulation, enacted in March 2025, lowers the minimum driving age to 17 and introduces stiff penalties for driving without a valid license, unapproved vehicle modifications and hit and run offences.
At the same time Dubai’s Department of Economy and Tourism (DET) issued Circular No. 1 of 2024, directing rental companies to return customers’ deposits within 30 days and to treat security deposits as pre-authorizations rather than purchases. These policy shifts will reshape how residents and tourists rent a car Dubai monthly. The following sections examine the new traffic law, the updated deposit rules and the implications for consumer rights and responsibilities.
New traffic law and its implications for car rental
The UAE’s new Traffic Regulation law, effective March 2025, introduces several changes that will directly affect monthly car rentals. The minimum driving age has been reduced from 18 to 17, but licenses are issued only after applicants meet strict medical and competency standards.
To deter unlicensed driving, the law raises penalties for motorists without a valid or recognized license. Offenders can face imprisonment and fines up to AED 50 000, while those driving under the influence of alcohol or drugs may be fined up to AED 100 000 and have their license suspended. Rental firms therefore need to check that visitors’ licenses are recognized by the Roads and Transport Authority and include warnings about these penalties in their contracts.
Article 26 tightens rules on vehicle modifications. Unapproved upgrades such as performance tuning or body kits are prohibited and may lead to vehicle impoundment. The law also authorizes artificial intelligence driven cameras to detect speeding, lane violations and mobile phone use.
Deposit and payment rules for monthly car rentals
Deposits serve as a guarantee against unpaid fines or damages, but new rules make them more consumer friendly. DET’s Circular No. 1 of 2024 requires rental companies to block a security amount and release it within 30 days. Customers no longer face long waits for refunds or hidden charges.
Key points include:
- Refund methods and timing: Deposits held on credit cards must be released to the same card within 30 days; cash or debit deposits must be returned in cash or via bank transfer, and the company must absorb any transfer fees.
- Permissible deductions: Only actual costs for traffic offences, vehicle damage, tolls and necessary administrative fees may be deducted. Additional surcharges are prohibited, providing price transparency to renters.
- Documentation: Residents need an Emirates ID and UAE driving license, while visitors must present a passport, valid visa and either an international driving permit or a license recognized by the UAE. Agencies may refuse rentals if licenses are unrecognized, aligning with the law’s penalties for unlicensed driving.
These guidelines improve cash flow for monthly renters and reduce disputes. Customers who do not see their deposit released on time can file a complaint with Dubai’s consumer protection department. However, renters should still monitor traffic fines: some offences are recorded days later and may be deducted from the blocked amount or billed separately. By ensuring that deposits are used only to cover legitimate costs, the circular balances consumer rights with the need for rental companies to manage risks.
Consumer rights, responsibilities and company policies
The policy changes benefit consumers by limiting how long deposits can be held and banning hidden fees, but they also demand greater responsibility from drivers and rental firms. Renters must return vehicles in good condition and pay any fines quickly; otherwise, rental companies are entitled to deduct outstanding amounts. If deposits are not released within 30 days, customers may seek redress through Dubai’s consumer protection channels.
Rental agencies are updating their operations accordingly. Many now pre authorize deposits on credit cards and provide handover guides covering speed limits and other road safety rules. Some firms have even introduced no deposit models, charging for fines and damages as they occur. While these offerings reduce upfront costs, renters should check for administrative charges.
Article 29 of the decree law reinforces the obligations of both parties: vehicle rental activities require a license, and companies must ensure the renter holds a valid driving license. Failure to meet these conditions can result in penalties for businesses and imprisonment or heavy fines for customers. The law also punishes unauthorized vehicle modifications and license plate tampering. To stay compliant, monthly renters should avoid altering the car and adhere to annual inspection schedules.
To enjoy a hassle free rental, consumers should:
- Use a driving license recognized in the UAE or obtain an international permit.
- Confirm that the rental agreement specifies the deposit amount, refund deadline and allowable deductions.
- Follow speed limits, wear seat belts and avoid tampering with the vehicle.
Comparison table: old versus new regulatory landscape
Below is a quick summary of the old and new rules affecting monthly car rentals in Dubai:
| Policy area | Old rules | New rules |
| Minimum driving age | At least 18 years to obtain a license. | Lowered to 17 with strict health and training requirements. |
| Unlicensed or unrecognized driving | Lesser penalties for driving without a valid license. | Fines up to AED 50 000 and possible imprisonment; only licenses recognized by the UAE are valid. |
| Vehicle modifications | Modifications regulated but enforcement was lax. | Major modifications require approval; violations can lead to impoundment. |
| Deposit practices | Deposits are sometimes held indefinitely. | Deposits must be refunded within 30 days and security holds cannot be processed as purchases. |
Ensuring a Safer and More Transparent Rental Market
Recent policy reforms have transformed the landscape for monthly car rentals in the UAE. The Federal Decree Law 14 of 2024 lowers the legal driving age to 17, imposes heavy penalties for unlicensed driving and unauthorized modifications, and empowers authorities to use AI enabled enforcement. Complementing the law, Dubai’s DET Circular No. 1 of 2024 requires deposits to be released within 30 days and bans surcharges. Together these measures aim to boost safety and promote fairness.
For consumers, the reforms mean greater transparency. Deposits are held rather than charged, and consumers can complain if refunds are delayed. Drivers must still meet their obligations: provide valid documents, follow rules and pay fines promptly. Rental companies must update contracts, verify licenses and adopt new technologies to remain compliant. As the UAE modernizes its traffic regulations, the balance between safety and convenience will continue to evolve, making it essential for both renters and businesses to stay informed and adapt.
