The increase in VAT from January 2025 will lead to higher prices

Therefore, the bank recommends not postponing larger investments, ideally by the end of this year

From January 1, 2025, Slovakia is expecting an increase in VAT from 20% to 23%, which will fundamentally affect the prices of goods and services. For larger investments, such as buying a car or renovating a home, the sums can be in the order of hundreds of euros. 365.bank therefore advises not to postpone the decision and to implement it before the end of the year. All the more so if they want to finance this purpose through loans. The sooner the interested party decides on this step, the more he can save. The government’s consolidation measures will affect household finances not only in the form of higher prices, but also in increased installments, as consumers will borrow larger amounts.

VAT increase as a result price increases projects into higher monthly installments for loans. This can cause that financing of larger investments overpriced by hundreds of euros. For example buying a car worth €20,000, financed by a consumer loan at an interest rate of 6% pa and a maturity of 96 months, would mean a monthly payment of approximately €262 in 2024. After the VAT increase at 23%, the person interested in a car will have to take a bigger loan and thus his monthly installment will also increase to approximately €269, which in the overall horizon during the entire repayment period will make the loan more expensive by almost €630.

„Now is the right time to make larger investments, which people often finance through consumer loans. The increase in VAT will significantly affect the total costs associated with loans, as people will need to borrow more money from banks. For those who have the opportunity to implement their plans this year, we therefore recommend not to hesitate. Thanks to the right timing of the purchase, they can save several hundred euros on the price, and thus also on the installments“ says Tomáš Barbarič, head of products at 365.bank.

365.bank:

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