4/15/2011 1:59 PM ET|
The best time to buy a car
Advice on when you can get the best deals on a new vehicle is plentiful -- and often wrong. Here's what you really need to know to save money.
You've heard all the advice about the best time to buy a car, and now you're eager to bounce into a showroom and snag a killer deal. But it's not that easy:
There's no particular part of any month when you're guaranteed to get the best bargain.
There's no one day of the week when dealers will be most open to lowball offers.
There are just as many people who think you'll get a good deal in the early morning as those who think the day's end is when the salespeople get sleepy, sloppy or desperate to make great deals.
All that, however, doesn't mean you can't save by gauging the timing of your transactions and being aware of market forces. And keep in mind that the rules are different for new cars versus used cars.
The tax-time used-car bubble
Steven Lang, who runs a dealership and an auto auction in the Atlanta area and writes for TheTruthAboutCars.com, says the used-car market is particularly sensitive around the time Americans are getting their tax refunds.
"From mid-February through early June, the auto industry goes through an event called tax season," Lang says. "Folks receive their refund checks from the IRS, which in turn creates a nice little bubble of activity in the used-car industry."
As evidence of this bubble, Lang cites the prices paid for used cars at auction during March and April. "Compared to three months (earlier), I would estimate cars sold between $700 and $1,500 higher than what was then the market price," he says.
It makes sense that with tax refunds in hand, many people have the chance to put a down payment on a used car or buy a used car outright. So that's when a lot of buyers are out there. And when there are a lot of buyers and supply doesn't increase, prices go up.
"I'd say used-car dealers have done two-thirds of their business for the year by the Fourth of July weekend," Lang says. "The best time to buy is October or the beginning of November. There are no holidays then. No one is getting their bonuses. And the inventory is depleted. Wholesale prices are down then, too. It all reflects the retail climate."
The new-car market isn't as sensitive to the tax-refund bubble. In fact, according to data from Edmunds.com, during 2010, new-car transaction prices showed the greatest discounts in March and July. April and May were close behind.
The end of the month may not matter
"There's some truth to the idea that new-car dealers may make better deals at the end of the month," says Phil Reed of Edmunds.com. "But people shouldn't think that a little tip like that alone will get them a great deal."
New-car sales are greatly influenced by manufacturers -- both by what incentives and financing programs they have in place and by production rates and the resulting size of their inventories. Sometimes such incentives or other sales promotions run out at the end of a month, and it may be in a dealership's interest to make a better deal then.
But a lot of buyers believe they can get better deals at the end of the month. That means more people are chasing cars at the same time. And more buyers chasing the same number of cars means dealers have less incentive to offer bargains.
Beyond that, there's nothing that says manufacturers have to end their incentives at the end of the month; they can end them any time they please. The trick is to know what the incentives are and when they're in place.
"People who think they'll get a better deal on rainy days and such are just being silly," Reed says. Dealers don't throw their business sense overboard just because it's a little damp outside, and they can wait out a cloudburst.
"It's easier to shop when there's nobody else on the lot," Reed says. "So being the first customer of the day may not be a bad idea. But that's not going to necessarily save you a lot of money."
VIDEO ON MSN MONEY
Our family doesn't buy new cars anymore....Only used cars
Need our money for more important family needs, food, fuel, rent, insurance, utilities..
I have owned many vehicles in my many years of driving.. Both new and used.. And I have had my share of crappy ones (both new and used) and excellent ones (again both new and used)...
Just because it is new doesn't mean it is the best.. Only that the warranty will take care of any problems without money out of your pocket...
It all depends on what type of vehicle you are buying and how old and beat up it is...Or on the flip side what type of vehicle in a newer model and how bad you want it....
If you bought a new vehicle and had a payment of $350 and had no problems for 1 year you paid $4200 for that vehicle that year... On the same token say you bought a used one and had a payment of $200 and had to spend $1000 on the vehicle you would have paid $3400 for the vehicle that year..AND had a savings of $800.....
So it all depends on what you can afford (or think you can afford) and what is best for you...
Buying a used car is a risk, my father always looked at it as buying someone else's problem. I did buy a used toyota Pick Up (1983), I bought it in 1984. Many problems with that Toyota. I worked on it to keep it running, 10 years or so later, I bought a new truck. I bought a Dodge Ram Truck. I never bought used again. As for the Toyota, I sold it to a guy that gave it to his son. He had problems like I did..
Today the used cars might be a safer risk, but I hate to gamble. I'll stick to a new vehicle.
I will never touch a used car again- as long as I have a little money in my pocket.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.