My finances, my projects, my life
September 23, 2019

5 steps to buying a car

  Compiled by myLIFE team me&myFAMILY April 19, 2019 405

So you’ve made up your mind: it’s time to buy a new car. But where do you start? And how do you give yourself the best chance of finding a real gem? Whether it’s looking for or checking the vehicle, financing or paperwork, myLIFE is here to make sure you have everything covered.

Step 1: Make a list of your requirements and preferences

Before heading to a dealership or going online, draw up a list of things that you would like and things that you need your car to have. There’s no point hankering after a two-seater coupé if you have a load of kids to ferry around! You need to find the balance between your requirements and preferences.

Write down what you think are the essentials. A big boot? At least five seats? Particular safety features? Then think about the kind of car you would like in terms of things like colour, size, features, make, performance, etc.

You will now have a shortlist that can be narrowed down further based on your budget and what is available on the market. Once you have arrived at your final shortlist, you are faced with two essential decisions:

Diesel or petrol ?

Both engine types have their pros and cons. A comparative table that will help you to choose appears in the myLIFE article Heartache or heart’s desire? Advice for buying the perfect car.

New or used ?

This will essentially depend on your budget. Although a new car is more expensive and depreciates quickly, it will have a manufacturer’s warranty so maintenance costs are lower. Used cars may be cheaper to purchase, but they will cost more to maintain.

Still can’t decide? Buying a nearly new car from a dealership may be the answer. This will be cheaper than buying a new vehicle and will still have the manufacturer’s warranty or an extended warranty. Shop around to make sure you are getting good value for money. Why not start by checking out  www.myauto.lu ?

Step 2: Financing

So you now know exactly what you’re looking for. What kind of budget do you have? Most car buyers take out a loan to finance their purchase to avoid dipping into their savings. Think about running some simulations and making an appointment with your bank to determine how much you can afford to repay every month.

Be aware that dealerships may also have a range of financing solutions available. These may have less favourable terms than the deals on offer from your bank, but often come with an extended warranty.

Why not cast your net a little wider to increase your chances of finding the right car for you?

Step 3: Finding a car

Whether you choose a new or used car, you will almost certainly begin looking online, be it on manufacturers’ pages, dealers’ websites or classified ad sites. There will certainly be plenty to choose from!

Keep your list close at hand and start by focusing on the model (make and year), mileage (in the case of a used car) and price. This will narrow down your search.

Why not cast your net a little wider to increase your chances of finding the right car for you? With Luxembourg being so close to other countries, it would be a shame to miss out on those markets.

Step 4: Checking the vehicle

So you’ve finally found the car of your dreams? Great, but don’t get carried away. If it’s a used car, you must check the general condition of the vehicle. Whether you are buying privately or from a dealership, take the time to examine the car closely (preferably in daylight).

  • Check the tyres and the bodywork (alignment, dents, scratches), and look for any leaks or faults, etc.
  • Examine the interior: test the electric windows, climate control, etc.
  • Check that the paperwork matches the car in front of you (number plate, mileage, etc.)
  • Make sure the owner has all the mandatory documents (registration certificate, service record, etc.)
  • Go for a short test drive. Do you hear any suspicious noises? Is the clutch working properly? Test the brakes, reverse gear, etc.
  • Get a garage to give the car a once over to make sure it hasn’t been in an accident.

Lastly, always give yourself time to think it over before making a decision.

Step 5: Paperwork

If you buy from a dealership, there is every chance they will take care of all the administrative requirements, which will not be the case if you buy privately. These requirements vary depending on where you buy the car and have it registered.

Compulsory documents

At the moment of sale, regardless of where you buy the car, the seller must provide you with:

  • The sales contract (private) or invoice (dealership)
  • The registration certificate (the old grey card in France; in two parts in Germany and Luxembourg) for a used car
  • The EU certificate of conformity, particularly if you buy your car abroad
  • The service record (recommended to monitor the car’s service history and mileage)
  • A valid (less than two months old) Car-Pass (which shows odometer readings) for a used car purchased in Belgium

Depending on where you have your car registered, you will need these additional documents: A certificate of technical conformity (Luxembourg, Belgium, France or Germany), a tax certificate (France), a vignette 705 from the customs agency (Belgium and Luxembourg), etc.

You can get more information on the registration process in and around Luxembourg from the relevant bodies:

Luxembourg : Société nationale de circulation automobile (SNCA) ;

Belgium : Direction Immatriculation des Véhicules (DIV) ;

France : Agence Nationale des Titres Sécurisés (ANTS) ;

Germany : Kfz-Zulassungsstelle.

In the case of a new vehicle, i.e. less than 6 months old or with fewer than 6,000 km on the clock, you buy it excluding foreign tax and pay the VAT in your country of residence.

VAT

The VAT rules are different if you buy your car abroad.

In the case of a new vehicle, i.e. less than 6 months old or with fewer than 6,000 km on the clock, you buy it excluding foreign tax and pay the VAT in your country of residence*. Make sure you tell the seller that the car is being exported so you don’t have to pay two lots of VAT!

In the case of a used vehicle, i.e. more than 6 months old and with more than 6,000 km on the clock, there is no VAT to pay in your country of residence. If you buy from a dealership, you pay the applicable VAT rate in the country of purchase. If you buy privately, there is no VAT to pay.

Additional taxes

Before you can drive your new car, you will have to pay additional taxes: registration tax in the form of a “chancery duty” stamp, motor vehicle tax (Luxembourg); road tax, circulation tax (Belgium); regional tax, CO2 tax (France); and vehicle tax, registration tax (Germany).

Insurance

Lastly, don’t forget to let your insurance company know before you buy your new car. You need to be insured to drive it home! If you only have temporary cover, you can complete the process when you get back.

Remember: If you buy your new car abroad, get some temporary licence plates for the drive home. Get more information on this from the registration authorities in the country of purchase. You can also bring it back on a trailer or use a transportation company.

After all that, you’ve earned the right to enjoy your new car! So, drive safely and take good care of it!

* Luxembourg VAT: 17%; France: 20%; Belgium: 21%; Germany: 19%.