When is the Best Time to Buy a Car?
Dreaming of a ̶w̶h̶i̶t̶e̶ ̶C̶h̶r̶i̶s̶t̶m̶a̶s̶ new car this Christmas? Don’t wait until the Holiday Season is over to shop around for a new ride. According to car experts, the end of the year is one of the best times to buy a car.
Why Buy a Car in December?
So much stuff is happening on the last week of the month, particularly on New Year’s Eve and that includes car dealerships offerings the biggest percentage discount of the year off of their cars’ MSRPs. Salespeople just want to close their books with as many sales as possible and go home. It’s also the last chance for manufacturers and dealers to offer the last sale of the year and maximise their numbers.
The biggest car deals of the year happen in December, specifically in the last week of the month. Why? Because the year is about to end and many salespeople in car dealerships have to meet their yearly car sales quotas to get a big bonus! December 31, in particular, offers the best deals as monthly, quarterly and annual sales targets all converge on this last day of the year.
Plenty of salespeople would go the extra mile of offering new cars at their lowest price just to hit their sales goal. Aside from huge discounts, many dealerships also offer freebies including and friendlier payment schemes should you decide to get a car loan to purchase your new vehicle.
Making Room for New Models
Aside from car salespeople trying to hit their sales quotas, salespeople in dealerships are also eager to sell cars at low prices to make room for new arrivals. Just before the next model year vehicles arrive, big markdowns are employed on the “old cars” until all the stocks are sold. Some vehicles are also shipped to huge private car sales companies.
With numerous car dealerships offering cars at deeply discounted prices, the competition is stiff. This greatly benefits the car buyers who are scrambling for great deals and incentives. The competition is also not just among car dealerships but almost all retailers, with the Holiday Season being a time of sales and spending. To compete for shoppers' dollars, cars continuously lower in price.
Other Great Times to Buy a Car
Aside from December, car dealerships are also known to provide big discounts during the:
New Year’s Day
If you can't make it on New Year's Eve because of the dinner parties and event commitments, head to your nearest car dealership the next day. The first day of the year is also a good time to buy a car. In fact, studies have shown that the savings can rival that of the discounts offered on New Year’s Eve. Generally, you can save around 8.5% off the car’s sticker price.
The first two days of January are usually included in the December sales reporting month for dealers because of the New Year's Day holiday.
Additionally, many manufacturers and dealers aspire to make great sales in December because post-New Year is usually the slowest month. After the holiday spending spree, most people are broke and hunkering down paying off their credit cards and loans. Because of the looming slow days for sales, the salespeople at the dealerships may be more willing to offer you a good deal.
Black Friday is the day after the American holiday of Thanksgiving that is celebrated on the fourth Thursday of November. It is not as hyped in Australia as it is in the US but it is gaining recognition. A growing number of car dealerships in the country take part in the Black Friday frenzy along with other retailers. They offer cars on discounted rates, party for the sales hype and partly to hit their end-of-month sales goals. Black Friday also kickstarts the Holiday Season car sales.
During this time of the year, the auto industry is starting to feel the pressure of selling the present year’s models. It is a critical time for dealers because they start to prepare for annual numbers. Many car manufacturers are also starting to roll out the next year’s car models and make way for the latest model. Unfortunately, there are a lot of present-year models that are sitting around in the dealerships.
Driven by the need to make more sales and hit their quotas, the dealers see the Black Friday frenzy as a perfect time to “get rid” of as many unsold cars as possible. They do this by slashing the prices of unsold vehicles. Buyers are likely to find cars in the present model year at really good deals.
End of the Financial Year
The End of the Financial Year, which happens on June 30, is a season of sales in Australia that has become a tradition. During this time of the year, many retailers including car dealerships put their products on sale. Car buyers can find many new cars at discounted prices as salespeople try to hit their end-of-month sales goals meet their annual financial sales goals.
It is also the time of the year for paying taxes. Some dealerships may need to liquidate several unsold cars to pay the tax bill. Selling these old stocks, even at a heavily discounted price, help reduce unsold stale inventory and generate funds. Automakers and dealers are going to be extremely motivated to clear out lingering 2019 model-year vehicles.
And then there’s the “making space for the latest products” reason. The EOFY marks the end date of the previous season’s high selling point and a good time to clear stocks from last season to make way for the new ones. If a store has a surplus of goods that are obviously not selling at the desired rate or price point, it better to free up space for the new and improved product for the new year.
But Timing is Not Everything
While certain times of the year are better than others when it comes to car buying, timing is not the only important factor to consider when buying a vehicle. To successfully negotiate for the best deals, you also have to be in the best bargaining position. This can be achieved by:
- Having a good credit score if you’re taking out a car loan to purchase a vehicle
- Providing a substantial downpayment
- Presenting good bank statements, income tax returns, and other documents that prove your financial capacity to repay the loan, such as pay stubs, certificate of employment, and certificate of pension or disability if not employed, and statements of business registration and financial position if you own a business
If you’re buying a car through vehicle financing, you must also be ready to pledge your car as collateral for the loan. This gives your lender the right to repossess and sell the car in case of loan default to recoup the money they lose. On the other hand, it lowers the lender’s risk of loss. This translates into better loan terms and a lower interest rate for your loan.
Thus, it is wise to combine patience with timing to get the best deal. Instead of rushing to the nearest dealership on Christmas Eve, do your research and car shopping in advance and work on improving your credit score first if you’re planning to take out a loan.
Research the features of the vehicles you want and do a test drive if you can. Check also the technology and safety features as these could greatly impact your quality of driving as much as the engine and fuel system.
After all, a great buy is not only defined by how much you the money you saved from the purchase. It also means buying a vehicle in excellent condition and one that passed a rigorous multi-point inspection done by certified automotive technicians.
Positive Lending Solutions is a finance broking firm with offices across major cities in Australia. We team up with big banks and online lenders to help you get the best car loan deals for your specific needs and financial situation. To talk to one of our car loan experts, tap 1300 722 210 or fill out the Loan Pre-Approval form now.