If you’ve turned on a TV during the last few months of the year, you’ve probably seen ads from your local car dealerships touting the huge savings you can get with their model year-end sales.
But because we’ve been trained to be cautious of too-good-to-be-true sales, and of car dealerships in general, we have to ask ourselves: Are model year-end sales really the best time to buy a new car?
For most, the answer is actually yes. Model year-end sales are when you can find the best deals on new cars. This is when dealers are starting to get in more of the next model year’s vehicles, and they have a pressing need to get rid of their current model-year leftovers.
This year, for instance, dealers are pushing out the last of their 2018 models as 2019 models continue to show up on their lots.
According to Edmunds, December has, on average, the highest discounts off manufacturers’ suggested resale prices (MSRPs): 6.1% off, in fact. When you’re talking about a $30,000 investment, a 6% discount saves you $1,800. New Year’s Eve is a particularly good day to purchase; TrueCar estimates you can save up to 8.3% if you buy on Dec. 31.
And it’s not just the discounts off MSRPs that model year-end sales include. Dealers will typically offer other incentives like lower annual percentage rates (APRs).
Why Year-End Car Deals Are So Good
Why can you get such a good deal on a new car, truck or SUV at the end of the year? It all comes down to sales goals. A dealership will have a sales goal that it needs to reach by close of business on Dec. 31, and as that terrifying date approaches, salespeople must scramble to incentivize buyers. The sales staff also have their own annual goals that affect their commissions, bonuses and raises.
Autotrader also suggests that, in much of the United States, cold weather keeps people from heading to the dealership around this time. That makes salespeople even more desperate to make the sale when shoppers do stumble onto the showroom floor.
The Downside to Model Year-End Sales
Everything good comes at a price — including low prices. Though you might be getting the very best deal on a new vehicle when you take advantage of a model year-end sale, you are exposing yourself to a few negatives.
For starters, your choices will be limited. Dealers are trying to clear out their lots, so the pickings may be slim when you arrive. That means you might not be able to get the exterior color, specific trim level or towing package that you were hoping for. To get the lower price, you might have to compromise on a few of your wants.
When you buy an outgoing model, you also pass up the latest technology. Maybe the 2018 model at a discounted price, for example, doesn’t come with blind spot monitoring or Apple CarPlay, but the new 2019 model offers those as standard features.
The biggest drawback to a model year-end sale, however, is the depreciation factor. When you go to sell that 2018 vehicle years later, it will be worth less than the 2019 model you could have purchased on the same date. It won’t matter that you bought it so late in the model year and that it has the same amount of miles on it as the 2019 models; the mere fact that it is one model year older will reduce its value.
Other Opportune Times to Buy a New Car
End-of-year sales, which can start as early as October, aren’t the only good time to purchase a new vehicle. They certainly offer the best deals, but you can find good deals on vehicles throughout the year.
If you aren’t going to buy in the year-end months of October, November (think Black Friday sales) or December, U.S. News & World Report says a good month to purchase is May. Why? Dealerships typically offer tremendous savings on Memorial Day weekend and also offer great deals throughout the month as shoppers begin to receive their tax rebates.
U.S. News & World Report also lists Monday as the best day of the week to purchase a new vehicle, simply because sales staff are less busy and can spend more time negotiating with you. And if you can pick a Monday at the end of the month, all the better. That’s because, according to Edmunds, salespeople are trying to hit their monthly sales goals, just as they are trying to hit yearly sales goals in December.
And the absolute worst time to buy a new car? January through April, says Edmunds. But if you find yourself in a need of a new set of wheels in the heart of February, don’t sweat. Check out these car-buying tips, and be ready to negotiate like a pro. And don’t forget to get the most money out of your trade-in: Here’s how.
Timothy Moore is a market research editor and freelance writer covering topics on personal finance, careers, education, pet care and automotive. He has worked in the field since 2012 and has been featured on sites like The Penny Hoarder, Debt.com, The Ladders, Glassdoor and The News Wheel.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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