Is the End of the Year Really a Good Time to Buy a Car?
Every business you can think of has a Black Friday sale, including car dealerships. Sure, you might not have thought about putting the car on your holiday shopping list, but the end of the year is rumored to be a good time to buy a car. If you’ve been considering purchasing a new set of wheels, you might be tempted to check out these seasonal promotions.
According to USA Today ‘s Jessica Menton, used car sales are on the rise and new car sales are on the decline, forcing dealerships to additionally dump some of their obsolete inventory. On top of that, the cut in federal funds rates this year has led to a drop in auto loan interest rates.
But does this mean that you should hurry to get this very big purchase during one of the most hectic and expensive times of the year?
I asked David Bennett, AAA ‘s repair systems manager, who said the end of the year was actually a good time to buy a car. “Dealers can offer discounted [prices] for taking vehicles out of inventory, which allows for tax savings based on year-end inventory,” he said.
This old myth you may have heard about getting the best car price when the new model year comes out ? This is not entirely true. If you’re trying to save money, it’s all about the calendar year. But that doesn’t mean every price you see is worth the rush to buy. Here’s what to remember if you are thinking about buying a car.
Explore before you arrive at the parking lot
“Consumers need to start researching cars now so they can identify a ‘good deal’ when it’s available,” Bennett said. Start with the brand and model you are interested in and explore the pricing options on the manufacturer’s website. This will give you an idea of what to expect from dealerships. The websites of these car manufacturers will also show you any manufacturer-level discounts or other promotional offers that you can expect from the model you are looking for.
Many dealerships will offer you a $ 50 or $ 75 gift card just to come and try driving a particular model. But this tactic is likely to suck you in. If you are not ready to test drive a particular car, put these “offers” out of your head and focus on what discounts the automaker offers, then the discounts that the dealership offers are clearly listed on the Internet. Once you subtract these from the vehicle’s retail price, you will have an idea of the prices you can count on. This will help you find the real deal on Black Friday.
Don’t rely on the dealership for the best financing deal
Interest rates have come down, but this does not mean that you are guaranteed a surprisingly low rate on car loans. Your rate is still highly dependent on your loan, so adjust your expectations accordingly. Bennett advised aspiring car buyers looking for funding to get pre-approved for a car loan before buying to better define their cost ceiling.
Then, when you are at the dealership, “the loan rate can be used as a negotiating point when buying a car,” he said. Saving 1% on interest may not seem like a big deal when you’re signing financing documents, but it will save you tons of interest in the long run.
Don’t force people to buy during a promotion
Bennett said that even if you’re in the mood for a car, don’t let your emotions get the best of you. You don’t need to negotiate with sellers and force them to pay more than you planned.
If the deal you’re being offered doesn’t work for you, walk away from there and keep thinking about the purchase. “Remember, you are in control of the purchase,” Bennett said. “You can refuse to negotiate at any time before the purchase.”
This post was updated on 11/26/19 to clarify David Bennett’s quote regarding car price discounts.