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Autofestival - buying a new or used car

Autofestival - buying a new or used car

by Sarita Rao 7 min. 21.01.2023
With a lower VAT rate of 16% this year, the Autofestival, which starts 23 January, could be the place to pick up a new car. Here is our guide to buying a new or used car in Luxembourg
As long as your car is delivered to you before the end of 2023, you can benefit from a 16% VAT rate.
As long as your car is delivered to you before the end of 2023, you can benefit from a 16% VAT rate.
Photo credit: Shutterstock

The 59th Autofestival, organised by FEDAMO (Federation of Automobile Distributors and Mobility), will run from 23 January to 4 February. Some 80 car and motorbike dealerships across 170 showrooms will again take part. You can find a full list of participating dealers here

New registrations were again down in 2022 by some 5.1% on the previous year, totalling about 42,000 new registrations. Sales of 100% electric cars were up by 4.7% and contributed to more than 15% of total registrations in 2022. 

In 2023, buyers who pay VAT on new or used cars will benefit from a reduced rate of 16% so long as a new vehicle is delivered before the end of the year. FEDAMO are keen to highlight that the delays in delivery times of the previous years, due to pandemic disruptions and a shortage of some parts, should end by the second half of this year with a return to normal delivery times. 

The organisation will also organise the Auto Occasiouns Festival, a second-hand car festival in May. In 2022, second-hand car registrations made up about 58% of total registrations, for the first time higher than new cars registered. 

Both festivals represent a good opportunity to trade-in your car for a new or nearly-new one. Car dealers have special promotions and discounts, including attractive trade-in prices, and most banks offer festival loan and lease terms at discounted rates (with greater discounts for electric). Generally, just under a third of annual sales contracts are signed during Autofestival. 

Even if you're not in the market for a new car, there are plenty of new models to test drive, so you can check out the latest automotive technology. 

Choosing your car

Subsidies for electric cars

Subsidies for electric cars will be reviewed for 31 March 2024
Subsidies for electric cars will be reviewed for 31 March 2024
Photo: Anouk Antony

The government provides financial aid or a subsidy of up to €8,000 for 100% electric cars and vans in the mid-size or family seven-seater range, dropping to €3,000 for less efficient cars that exceed electricity consumption of 180Wh per kilometre. Hybrid and plug-in cars no longer receive a subsidy. There are also now subsidies for installing a charging station.

You can get a subsidy of up to €600 on an e-motorbike or moped, and pedal assisted cycles or ordinary bicycles, no more than 50% of the purchase price.

The current government scheme comes to an end on 31 March 2024. You can find a full list here

Car tax calculator

The Fedamo website provides prospective purchasers with a calculator for car tax and information about vehicle registration.

Fix your budget and criteria

Online advice suggests you fix your budget, then list your car criteria in order of importance – make, model, fuel consumption, size, essential equipment and the main use, such as commuting to work or family travel.

Always test drive more than one car to get a comparison, ideally on a route you'll be driving regularly so you can try out road holding, manoeuvrability, acceleration and comfort.

Financing your car

Cash or credit?

With interest rates rising, it might be more economical to combine cash savings with a car loan. Some of the banks in Luxembourg are offering unique Autofestival car purchase loan or lease terms, so it's worth shopping around and asking the dealer for their terms.

Bank loans for buying or leasing

Car loans offer very attractive rates compared with personal loans because the vehicle itself constitutes a guarantee to the bank. Loans are usually paid back through fixed monthly instalments.

Banks provide online calculators so you can work out your monthly payments including interest over a the period of time you want to repay your loan and see the total amount in interest you will pay in addition to the cost of the vehicle. The links below take you directly to the bank's Autofestival or personal loan and leasing credit terms.






You'll find more information on personal loans and providers here

Here's an example of how a car loan would work: with an AER (Annual Equivalent Rate) of 2.97%, a car costing €27,000 will require a monthly payment of €596.84 over a 48-month (four-year) period. The interest you will pay over this period is approximately €1,648, but interest is tax deductable.

Zero-percent credit loans

Car dealers will often offer 0% interest loans. There's no such thing as a free lunch, so the dealer will be covering the cost of the loan and may limit the duration, meaning you have very high monthly payments and a big first down payment.

Check too, that a loan doesn't negate any other discounts on the car that might outweigh the benefit of 0% interest on a loan. Basically, compare the savings you get from an interest-free loan against the savings you might lose on discounts or the trade-in of your old car.

Employee discounts

Your company might offer discounts with specific dealers (particularly if it runs a fleet of company cars) or with car loan providers. In addition, those working for the EU institutions can benefit from a VAT (TVA) exemption from the purchase of a car valued above the VAT threshold (both new and used). You can find out about VAT on new and used cars here

Buying a used car

New cars lose value the minute they drive from the forecourt, so sometimes a used car can be better value for money, depending on its age and history. Think about the market depreciation value of the brand of car you are choosing. Some brands like BMW, Audi, and VW depreciate at a slower rate. 

At the dealers, make sure you read through the vehicle maintenance records, and check invoices, registration card, roadworthiness test documents, and the log book. As a rule of thumb, things start to need fixing or replacing when vehicles are more than five years old, and it's worth noting if a car has been serviced regularly with filter and oil changes. Most cars have their first technical inspection at 4 years and then again at 6 years, which is when many owners decide to trade up. 

Inspect the exterior paintwork, windows and windscreen, tyres and wipers. Inside the car, check the speedometer, seats and seat covers, dashboard controls and air conditioning. Cars that have been sitting idle at the showroom may need a battery and air conditioner unit recharge.

Ideally, you should take a test drive to hear the engine, check the gearbox and brakes and watch for any leakages after the car has been driven, such as transmission fluid. It's also worth checking the exhaust for emissions, as a car can fail its technical inspection (contrôle technique) on this. If you prefer the advice of a professional, ACL can do a check for you. 

Before you transfer payment, make sure you have all the necessary documents, including an invoice. You'll find details of seller's and buyer's obligations on The ACL provides guideline invoice information here

Cross-border car purchasing

It is possible to buy your car over the border and register it in Luxembourg (the same if you bring a car from your home country and need to register it).

The government provides information on car registration and roadworthiness certificates here.

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