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Buying a new or used car
AutoFest

Buying a new or used car

by Sarita Rao 6 min. 25.01.2021
If you are thinking of buying a new car or a second-hand one, you can pick up a discount or a bargain during Autofestival

The 57th Autofestival, organised by FEDAMO (Federation of Automobile Distributors and Mobility), will run from 25 January to 13 February, and is longer than usual to allow for safety requirements and restricted numbers.

With car sales suffering due to lockdown in the first half of 2020 (the lowest number of new registrations for 18 years), some 88 garages are taking part across 170 car showrooms. This year, around 160 models will be on display, including 50 electric ones. You can find a full list here.

If you are thinking of buying a new car or a second-hand one, this is the time to do it. Car dealers will have special promotions and discounts, and most banks offer festival loan and lease terms at discounted rates (with greater discounts for electric or hybrid cars). 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 will be plenty of new models to test drive, so you can check out the latest automotive technology, including hybrid propulsion, plug-in hybrid and electric models. 

Choosing your car

Subsidies for electric cars

The government provides financial aid or a subsidy of €5,000 for 100% electric cars and vans, and €2,500 for plug-in hybrids.

Barcelona, Brussels, London, Paris, Madrid, Milan and Hamburg have placed limited bans on diesel vehicles, and for the first time registration of electric vehicles overtook those of diesel ones in Europe in September 2020. 

Car tax calculator

The Autofestival 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 low interest rates on savings, 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.

BCEE

BIL

BGL

ING

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 Guichet.lu. 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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