Which is the Best Month to Buy a Car?

Category: Auto

Do you know the best time to shop for a car? And how is the global chip shortage affecting auto prices and inventory? Today I have some some tips for online auto buying that will help you save money and get the car you want. You may not even have to set foot in a dealer showroom. Read on...

Online Car Buying Tips

According to experts at Kelley Blue Book and Edmunds, December is the best month of the year to buy a car. Non-stop TV ads touting car deals also attest to that fact. The biggest discounts offered by auto makers and dealers are found in the months of December, March and January, in that order. Here's why end of the year car buying deals can make December the most wonderful time of the year to get a new set of wheels, all wrapped up in a big red bow.

One of the biggest factors is quotas. Dealerships and salespeople have both end of month and yearly quotas to meet. That's the December Double Whammy. Especially if you're paid on commission, and even more so if there's a bonus for making your quota, a salesperson will be motivated to make the best deal possible before the ball drops on December 31st.

A related point is that every manufacturer wants to earn the designation as the Top Selling car, truck or SUV of the year. For example, Ford might offer great deals on their F-150 pickup truck in December, if they think they can beat out the Dodge Ram or Chevy Silverado. It's all about bragging rights and marketing for the coming year.

December car buying tips

The new year often brings new models and designs, so dealers may be anxious to clear out their inventory of the older models to make room for new stock. Buying last year's model at a discounted price can be a win-win for you and the dealer. (The 2022 models started arriving on the lot months ago.) In addition, some states charge an inventory tax on car dealers, based on the number of cars they have on their lot at the end of the year. So there's further incentive for deals and discounts to limit the dealer's tax burden.

And of course, the weather plays a role in many areas. If it's cold and snowy, customers will be less inclined to trudge through car lots in search of a deal. The laws of supply and demand, coupled with your dealer's desire to meet quotas and make room for new models, all come together to give car buyers an edge in December.

The semiconductor chip shortage we keep hearing about, and low interest rates, are affecting demand, availability, and pricing of many new cars. Prices for new cars and trucks are about 5 percent higher than last year. Used cars are in such high demand, that prices have jumped over 40 percent! If you're in the market for a new car, it's a great time to sell or trade in a used one.

The chip shortage is also affecting the feature sets of new cars. Car and Driver has an article detailing features some new cars won't get because of the chip shortage. Those include heated seats, touchscreens, backup assist, HD radio, and hands-free driver assistance technology on some models.

How to Research (and maybe even buy) Your Car Online

Most people would rather go to a dentist than a car dealership. If you hate the high pressure sales people, the backroom negotiations with the invisible but all-powerful “finance manager,” the last-minute up-sales of extended warranties, undercoatings, floor mats, etc., then you may want to get as much of your car buying done online as you can. The good news is, you actually can buy a car without setting foot in a dealership.

There are plenty of potential gotchas when purchasing a car. But arming yourself with knowledge will help you avoid getting taken for the proverbial ride. For most, the first step toward car-buying is to visit your bank or credit union. Get pre-approved for a loan so you know how much you can afford to pay in total and per month. Then stick to that budget no matter what. (Tip: credit unions offer much better car loan terms than banks, and it’s easy to join one.)

A favorite line from dealers is "How much do you want to spend on your monthly car payment?" My advice is to tell them they have it backwards. First, you negotiate the price of the car. Then your monthly payment is simply the price divided by the number of monthly installments. If you start with the monthly payment, you'll always end up paying more than you should.

If you plan to pay cash, don’t let that secret out of the bag until price negotiations are complete. Dealers make more money when you finance a car, and they may factor that into their price calculations.

Next, do your research, all of which can be done online. Edmunds.com is one of the best places to start; the highly respected Edmunds has refined its proprietary method of estimating actual sales prices of thousands of new and used cars since 1966. Edmunds also published detailed reports on the reliability, maintenance needs, and insurance costs of specific car models. Consumer Reports New and Used Car Reviews & Ratings is another comprehensive, trustworthy resource.

When you have the field narrowed down to a few makes and models, it’s time to get a feel for market prices and your trade-in value. Edmunds is great, as I’ve mentioned. So is Kelley Blue Book. NADA is another popular pricing tool; but be aware that NADA is the National Auto Dealers Association and represents dealers’ interests.

Getting a Price Quote

Now that you have a feel for what your potential car(s) should cost, you can get actual price quotes from a number of websites. CarsDirect will help you find the right car at the right price and then connect you to the Internet sales department of the dealer who has the deal. TrueCar.com will show you what others have paid for similar cars as it displays dealer offers that meet your specs. CarGurus is a useful tool for both new and used car purchases. CarGurus rates each deal on a scale of "great" to "overpriced" and factors in both price and dealer reputation to rank deals.

The American Automobile Association (AAA) has an Auto Buying Program that offers to help members "get a great deal on a new or pre-owned vehicle, while avoiding the stress and hassles normally associated with buying or leasing a car." AAA refers members to participating dealers that agree to provide low, pre-set, no-haggle pricing. There's no cost for AAA members. USAA - the United Services Automobile Association - has catered to military personnel and their familes with auto loans and insurance since 1922.

Car Salesman

It may surprise you to learn that Costco has a car-buying program that moves several hundred thousand vehicles per year, including motorcycles, boats, and RVs.

Carvana pioneered the Car Vending Machine concept, but they also offer a service that lets you buy a car completely online and have it delivered to your door. You can also visit one of their locations in person, in Atlanta, Nashville, Charlotte, Houston, Austin, San Antonio, Orlando, Philadelphia, Indianapolis, Kansas City, Memphis, and several other cities.

So you can see there are several ways you can actually close a deal at a firm price without ever setting foot on a car lot. But if you prefer to buy in-person (and many do), you can approach local dealers with the best deals you found online and see if they’ll match prices. Don't be afraid to walk out the door if the salesperson won't accept your offer, or if he tries that annoying "how much do you want to pay per month" line. As I mentioned above, negotiate your best price, and then divide by the number of months in the terms of the loan. That's your monthly payment, and it should be the LAST thing you agree on, not the starting point.

Avoid Car Buying Scams

Buying a used car from a private seller can save money; Edmunds reports actual sales prices for dealers and private sellers; the latter are often significantly lower for the same car specs (make, model, year, condition, mileage, etc.). But scams are common in private auto sales, so stay on your toes.

I have a friend who has bought several used cars on eBay or Craigslist, sight unseen. He does tons of research, asks lots of questions, and has even traveled over 1500 miles to close the deal. Amazingly, it's worked out well for him, but I can't recommend doing it that way.

My advice is always, ALWAYS take a private seller’s car to a mechanic of your choosing, not his, for a pre-purchase inspection. If the seller won’t agree to that, keep looking. And never take cash to a stranger’s home - or worse, a remote “storage lot” - to pay for a car. Likewise, don’t wire money to anyone. Meet in a well-lit public place, preferably where video cameras are rolling. Some police stations actually encourage people to meet in a designated part of their parking lots for transactions like this.

Ask the seller for the VIN number and get your own car history report from CARFAX or AutoCheck. Don’t try to save a few bucks by accepting the seller’s report - it may belong to a different vehicle, with the VIN number altered.

Beware of stolen vehicles. The National Insurance Crime Bureau offers a free VIN check to see if a vehicle has been reported stolen and not recovered. Also demand to see the owner’s driver’s license and registration; make sure the owner’s name is on both and that he looks like who he says he is.

Buying a car may never be fun; it’s a confusing, stressful, high-stakes game. But with online resources, much of the pain and a lot of travel time can be eliminated. Your thoughts on this topic are welcome. Post your comment or question below…

 
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Most recent comments on "Which is the Best Month to Buy a Car?"

Posted by:

Chris
10 Dec 2021

A news article about Carvana reported that, due to their success, owner's title and other documents have delayed for many months. Some states have a 30 day limit for temporary tags.


Posted by:

chris
10 Dec 2021

One problem with waiting until December and later is that inventory becomes limited. The car that you have in mind might not be available by that time.
Maybe your local car dealership will be willing to transfer a car form another dealership, but you will pay for that transfer.
Also, for me anyway, I am not willing to get a car from other than a local dealership. If problems occur how are they to be resolved with an on-line dealer?


Posted by:

Daniel Wiener
10 Dec 2021

We're partial to Toyota Camry hybrids, and lease a new one every three years. (I won't get into the lease-vs-buy argument; it makes sense in our case.) When a lease is expiring, my procedure is to email all of the Toyota dealers in my area (which is a lot in Southern California) and ask for a lease on a new Camry hybrid (while trading in the old one) for no more than our current monthly payment, with absolutely no extra fees or taxes or other drive-off costs - no money out of my pocket. This lets me make an easy apples-to-apples comparison among dealers. I make it clear in my emails that the first dealer who meets my terms (or offers better terms) will get my business. I then get a lot of call-backs from salesmen telling me that such a lease price is impossible, and begging me to come in and talk to them. But I do get a few calls or emails saying they can do it (or very close), so I still have several dealers to choose from.

So far this has worked very well. We're now on our fifth Camry hybrid. In fact a couple of times we've had a dealer contact us and offer to lease us a new car (on the same terms) a year before the current lease would expire, simply because the demand for used cars happened to be especially high, and they could get double credit for their quotas by selling both the old car and leasing the new one. Of course we agreed - there was no downside for us and we got a new car early.

But car salesmen will always be car salesmen. Another time I made a deal as described above, and when it came to signing the papers the salesman tried to suddenly add on an extra charge, with the manager telling me it was something standard and couldn't be avoided. I told them that this wasn't what we had agreed to, and I walked out. As I got in my old car, the salesman raced after me and apologized and said he'd gotten his manager's manager to waive that charge.

The bottom line is that in ANY negotiation you MUST always be prepared to walk away, otherwise you have no leverage.


Posted by:

DaveM
10 Dec 2021

Especially good advice regarding cash transactions - NEVER take cash to an unfamiliar area or anywhere after dark. I work for the local police department (I'm not a police officer) and the PD lobby is always open to the public during normal business hours. This is a good, safe place to conduct business (check in with the Desk Officer first). Also, if not too busy, the Desk Officer will usually run the Title ("Pink Slip" in California)for you to see if the car is reported stolen. Even better, make your deal at your bank. Ask someone and they will generally show you an unused desk or a table away from the public. At your bank, after you come to an agreement with the seller, you can then go to the Teller's window and withdraw the cash or get a Cashier's Check. Same if you are buying. After reaching the agreement, you can take the buyer's cash directly to the Teller and deposit it. If the seller or buyer has a bunch of excuses why he can't meet you at the bank or the PD lobby, walk away and keep looking elsewhere.

Never exchange money until you have the signed "Pink Slip" in your hands. If the seller "forgot" to bring the Pink Slip or if his ID doesn't match the Legal Owner on the Title, walk away and keep looking elsewhere.


Posted by:

DaveM
10 Dec 2021

Bob - a petty gripe. Like "ATM Machine" and "PIN Number", "VIN Number" is redundant. "Vehicle Identification Number Number"?

Signed: Language Cop.


Posted by:

Renaud Olgiati
10 Dec 2021

When buying a used car, check all the paperwork from the seller.
I once bought a "Three years old" car, which came with all the maintenance bills, each with date and mileage, going back over four years !
Luckily the seller was a work colleague of She Who Must Be Obeyed, so we had a talk, and came to an acceptable arrangement...


Posted by:

gene
10 Dec 2021

You can search "how to negotiate with a car dealer" and find lists of things you should NEVER agree to as they are simply profit for dealerships - like extended warranties and more. I have leased for 30 years, this fall though, the purchase price for my leased vehicle was $4000 less than it's value, so I bought it. The "finance manager" told me that it would never be worth more than it was now. I thought about that for a month, then went in and bought a new vehicle, could have leased one but decided to buy this time, got $6000 more than I paid for my leased vehicle in trade and paid the remainder in cash.

Still putting the lease payments into savings each month, in two or three years, I'll repeat the process - insurance discounts (I use USAA) have not been updated for the latest technology, my new vehicle has tech that should get me much larger discounts than I got, if my state legislature would update their standards, which is what the agent I spoke to told me. Additionally, new car discounts go down each year most significantly in the third year. So, I wrote my state senator and representative both of whom agreed with me and promised to try to right this next session.

I'd been leasing small Fords for decades, but Ford, and others, have stopped making small cars, which I prefer - I'm retired and after three years with my Fiesta had less than 9000 miles on it, I see the dealership has it for sale for $3500 more than they gave me, practically its "new" price. I may try Daniel's technique next time when I am ready to sell in three years or so. That seems a sound strategy particularly if you do your research and know what you want.


Posted by:

Steve
10 Dec 2021

We bought a new Tesla Model 3 online. The price quoted is the actual price, so no negotiation is involved. We then went to the Tesla store to view the vehicle. Tesla dealership employees are on salary, not commission. We paid a $250 deposit which is not refundable, should we decide to cancel our order before delivery. The price of the vehicle we ordered has gone up twice since we placed our order but our price is locked in. Due to manufacturing shortages delivery won't be until Feb.-Mar. 2022!


Posted by:

Dick
10 Dec 2021

I bought my last 2 Buicks after searching Dealer inventory on line and picking out the car with exactly what I wanted including accessories and color. The last one was from 100 miles away and the dealer delivered it, picked up his check and returned home. I take it to local Buick dealer for all service. No problem. I always get better rates from my credit union.


Posted by:

Daniel Wiener
10 Dec 2021

I didn't discuss it earlier, but let me say a few words about leasing vs buying. It's very situational as to which is best. We typically put 10,000 to 12,000 miles per year on our Camry, which closely matches the allowed lease mileage. My daughter bought a Prius a few years ago when she was driving 20,000 miles a year for her job, so in that case a lease would have made no sense. I also have a 2005 Tacoma truck (there are times when a pickup truck is essential) which only runs a few thousand miles a year, so it would be stupid to lease one.

We're in the sweet spot for leasing a Camry (which I've always gotten very good deals on). Monthly payments on a purchased vehicle would be about 50% higher than the equivalent lease. True, I'd own it outright after 6 years when the payments would stop, but by then the annual maintenance and repair costs would be escalating, and soon I'd be wanting to buy a new car anyway. With a lease I don't have to worry about maintenance or repairs (which are covered), and I get a brand new car every three years (or sooner).

So leasing a car can indeed make financial sense, depending heavily on the circumstances, and it certainly minimizes the hassle factor.


Posted by:

Allen
10 Dec 2021

A favorite line from dealers is "How much do you want to spend on your monthly car payment?"

That's a loaded question . . . US$ 0.00 of course! Do I look stoopid?


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