My finances, my projects, my life
September 25, 2022

Heartache or heart’s desire? Advice for buying the perfect car

  Compiled by myLIFE team me&myFAMILY June 12, 2017 103480

From 24 January to 5 February 2022, car dealerships across the country will be participating in the 58th “Autofestival”. New models, exceptional discounts, guarantee extensions and competitions give you plenty of reasons to take a look. However, to avoid finding heartache when pursuing your heart’s desire, we recommend that you take the time to plan your vehicle purchase properly.
Here are some helpful tips!

Buying a new car is fun, but it isn’t always easy. The days of safe bets, clean divisions and simple choices are gone. Now, smaller models can hide powerful diesel engines, some monospace designs are cheaper than hatchbacks, many 4×4 vehicles are adapted to urban driving, and electric car makers are offering models than can run for more than 600 km. How to choose?

Before letting a glass of champagne and fancy promises cloud your judgment, take a few minutes to think so that you can begin the search for your vehicle in the right state of mind. After all, buying a car is not like popping out for a newspaper. Or it shouldn’t be, at least.

The good news is that we have done the groundwork for you. Here is a brief list of some very useful advice.

Simulate your budget

Before getting carried away, you should ask yourself the most important question: what is your budget? Setting a limit and sticking to it is essential if you don’t want to end up with buyer’s remorse.

If, like most households, you don’t have enough spare cash, you also need to agree monthly repayment limits with your bank or lender. To do this, just carry out a simulation on bil.com or arrange a meeting at your bank.

That said, even if you do have enough to spend, a loan can be useful to avoid dipping in to your savings. And under certain conditions in Luxembourg, it is possible to deduct debit interest on a personal loan up to EUR 672/year per person in your tax household.

Some dealerships also offer financing solutions. Barring exceptional terms (e.g. 0% loan available from the manufacturer), a loan from your bank will generally be more attractive. Especially as the down payment will tend to be higher at a dealership. As every situation is unique, the best thing to do is to compare and negotiate before making a decision.

Simulate your personal loan

Make a list of what you need and what you want

Do you know your budget? Then make a list of your purchase criteria: type of car, make, model, fuel type, colour, essential equipment, etc. Where possible, list alternatives for each criterion in order of preference. This will give you more leeway in your choices and negotiations.

Your list should include objective (needs) and subjective (wants) factors. Try to find a good balance between the two. Once you’re satisfied, stick to this list rather than buying something that you can’t really afford on an impulse, or after receiving a hot tip from your single buddy when you’re married with three children (even if that roadster he likes is a beauty).

A few key points: a brightly coloured vehicle is generally harder to resell and more expensive to insure.

New or used?

Nothing beats the smell of a new car and the pleasure of being the first one behind the wheel, but second-hand vehicles are cheaper, which means you can get higher-end or better equipped models for the same budget. Decisions, decisions!

Although the “Autofestival” mostly offers special terms on new cars, there are also good deals to be had on used vehicles. Our advice: whichever you prefer, if you don’t know much about cars, you’re always better off buying from a professional. Second-hand cars from dealers are slightly more expensive than from private sellers, but you have more peace of mind knowing that the vehicle has been checked and that your purchase is under guarantee. On top of that, you can trade in your current vehicle to increase your bargaining power.

Petrol or diesel?

Here’s a debate that will continue for as long as oil is around. According to popular belief, diesel is more cost-effective if you drive a lot and keep your car for a long time. However, it’s not that simple. This table gives you an overview of which fuel is best in terms of different criteria.

Purchase pricePetrol This can be verified by comparing different makes of the same model.
Price at the pumpDiesel Simply compare prices at service stations to see this considerable difference.
Maintenance costsPetrol Maintenance on petrol-fuelled cars is generally cheaper, but diesel engines wear out less quickly, so the choice here is debatable.
Fuel consumptionDiesel On average, diesel engines use 15% less fuel than petrol engines, provided that they cover a lot of distance (at least 20,000 km/year) and avoid short trips.
Resale priceDiesel Diesel cars generally retain their value better as the engine wears out less quickly.
Insurance costPetrol Diesel vehicles are more expensive to insure due to their higher resale price and higher cost of replacing parts after an accident.
Impact on the environmentJokerThis factor is a wildcard engines emit more CO2 while diesel engines emit more fine particles, so they pollute differently. It is hard to identify a clear winner for this criterion.

Test drive the vehicle

The feel-good factor often counts for more than great stats. Whether you buy new or used, you should always ask to test drive a vehicle that’s piqued your interest. This is still the best way of checking whether it meets your expectations and is adapted to your surroundings. If you have children, take them with you. Taking their opinion into account may lead to a more serene driving experience, and you can’t put a price on that!

Good luck and drive safely!