Is it legal for car rental companies to demand security deposit?

Question: I plan to rent a car in Dubai, but the company demands a security deposit.

- Ashish Mehta

I tried asking the reason, but the salesman did not offer a convincing answer. Is it legal for the company to seek a deposit? If yes, what are the rules for getting the security deposit back? For what purposes can the amount be used?

Answer: In Dubai, renting or leasing vehicles must not be carried out without obtaining a licence from the competent authority. Before renting out a vehicle to a lessee, a lessor must verify the validity of the driver's licence. This is by Article 29 of the Federal decree-law No. (14) of 2024 on traffic regulation:

"1. Vehicles shall be rented and leased by the provisions of this decree-law and the legislation in force in the State.

2. Vehicle rental activity may not be practised unless a licence is obtained from the competent authorities. The executive regulations of this decree-law shall determine the conditions for practising vehicle rental activity.