If you're contemplating a car purchase, you are likely looking for ways to save. After all, spending several thousands of dollars on a vehicle is not something to do without careful thought. One way you can save is through timing your car purchase. By buying your car and getting a car loan at the right time, you can save substantially. Here are the secrets to helping you save through proper timing on your car purchase.
What Are the Best Months to Buy a Car and Take Out a Car Loan?
If you're in the market for a new car, timing your search can help you get a great price. Certain months of the year are slower for car dealers than others, and this can lead to lower prices for you as you look for your new car.
September, which is when the new model years are typically released, is a great time to shop. This is when the dealerships want to start moving older inventory. As long as you don't have your mind set on the latest model, you can get a great deal. October and November can bring additional discounts as dealers near the end of the year and add more new models to their inventories.
December also is an excellent month to buy a car. Most dealerships have to meet quotas, and if they're short for the year, they'll start discounting some inventory to move it out. The week after Christmas is particularly ideal for car shopping.
If you miss these two hot-selling months, consider January or February. These tend to be slower months for retailers, including car sellers, and as such dealerships are looking to make a deal.
Other Good Times of Year to Buy a Car
While October, November, and December are excellent months to buy a car, you may need to purchase a car outside of this three-month period. Another way to time your car purchase is to time it around major holidays, when dealers may offer special sales. Car dealers often offer sales on these holidays:
- Black Friday – Car dealers are retailers, and they are often motivated to offer incentives on the biggest shopping day of the year.
- New Year's Eve – This is the dealer's last chance to get sales in for the calendar year. If they're still trying to meet their sales quota, you could get a good price.
- Memorial Day – Memorial Day is a popular time for car deals, so plan some car shopping after your barbecue.
Other major holidays also have car sales, but these three tend to bring the biggest discounts.
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Monday or Near the End of the Month is Best to Buy a Car and Get a Car Loan
Not everyone can shop on major holidays. If you need a car and don't have the benefit of a flexible calendar, consider the timing of your visit that week or month. If you can shop early in the week, or toward the end of the month, you may be able to snag a better deal. In fact, shopping on a weekday, Monday being best, can save you as much as 8.1% on the cost of your vehicle. The fewer shoppers there are competing to purchase a car, the better your price will be.
Other Factors for Best Times to Buy a Car and Get a Car Loan
In addition to the overall competition and dealer motivation, the type of vehicle you're shopping for may impact the timing of your car loan. Data has shown that certain types of vehicles sell for better prices at certain times of the year, such as:
- Compact car – November
- Midsize SUV – May
- Full-size and small SUVs – December
- Trucks – October
- Midsize car – November
In addition, consider the timing based on your financial status. This has a direct impact on your car loan and maybe a more important factor to consider when deciding the best time to buy a car.
Save for Your Down Payment
A down payment lowers the monthly cost of your vehicle and the amount of interest you pay over the life of your car loan. The more you put down on your vehicle, the more affordable your monthly payments will be. A good down payment can also make your car loan more affordable by opening the door to a greater number of loans at a better interest rate.
Clean Up Your Credit
The best time to buy a car is when you are able to afford the car and the loan, and your credit rating will have a significant impact. A strong credit rating means a more affordable loan.
Get Car Loan Pre-Approval
Finally, before you decide that it's time to buy a car, talk to your credit union. Get pre-approved for your auto loan before you start shopping to help you stay within a reasonable budget that fits your needs.
How Much Car Can You Really Afford?
Carefully consider your budget before heading to the car dealership. How much can you really afford to spend on a car? A general rule of thumb is to keep your monthly car payment within 10% - 15% of your monthly take-home pay. This will protect you from buying more than you can really afford.
Keep in mind that cars cost more than just their monthly payment. With any car you buy, you'll need to plan for:
- Gas or fuel, or if you purchase a hybrid, electricity
- Repairs and Scheduled Maintenance
- Taxes and/or registration
Some of these, like the fuel costs and insurance fees, vary from car to car. Consider all of the costs of car ownership as you decide what you can afford to spend on a car.
Watch the Dealer Add-ons
Having your budget in mind before you head to the dealer is essential, but you still need to proceed with caution. Dealers make a commission on the total price of the cars they sell, but they may make more of a commission if they add on to your purchase. You can always check with your credit union for pricing on extended warranties and Gap insurance.
In addition, be careful not to share your bottom-line monthly payment amount with the dealer, no matter how hard they ask for it. This is a negotiating tactic dealers use to try to fit you into a car, rather than allowing you to find a car that fits your budget. They will push the numbers around, extending the term of the loan, for instance, to make the car fit your monthly max, and you can end up with a far more costly vehicle and car loan than you planned on.
Understanding the Bottom Line About Timing Your Car Purchase
So what's the bottom line? When is the best time to purchase a vehicle? The answer depends on your needs. When you're financially prepared, know what you can afford, and have money for a down payment, then it's a good time to buy a car. Timing your purchase around the calendar can also help you save, but it's far more important to be financially prepared for the purchase, so take time to straighten out your finances and get pre-approved before you start shopping.
For more details on the best time to buy a car and more tips to save you time and money on your car-buying journey, review our "Car Loans 101: Car Buying Made Easy" complete guide!
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