Wednesday, October 1, 2014
Search: 

The Best Time, Any Time, to Buy a New Car



It's a pretty day. You've just done your first-of-the-month budgeting and you think you might be able to afford a new car. And some sleek models that interest you have just come out. So you think you'll go car shopping.

Stop.

If you care about getting the best deal, your timing is all wrong.

To put yourself in the best negotiating position, the time of month or year when you shop for a new car really does matter. Dealerships and individual salespeople have monthly quotas to meet. So in the last few days of a month, they're especially eager to make deals.

In late summer and early fall, as the next year's models are about to go on sale, buying a leftover vehicle from the current model year can mean huge savings. Shopping for cars, not gifts, right before Christmas--when auto showroom traffic is light--also can produce a good deal.

And, even consider shopping in very bad weather—when the roads clear just after a snowstorm, for instance. "Any time when few people are out and about is a good time to be car shopping," says Jack Gillis, spokesman for the Consumer Federation of America, Washington, D.C., and author of "The Car Book."

Get financing preapproved from your credit union before you ever go car shopping.

Shopping at the right time can boost your chances of getting a really good car deal. But if you aren't prepared with research and a pragmatic target price, you aren't likely to make the most of your good timing. Fortunately, Internet Web sites now make it easy to find once-elusive cost data that will tell you how ready a dealer is to deal on a given model.

Web sites like Kelley Blue Book, Edmunds.com, and MSN Autos show you the dealer cost or invoice price in addition to the list price or manufacturers suggested retail price (MSRP). Whenever you're shopping, always start negotiating from the invoice price, not the MSRP.

Kelley Blue Book and Edmunds also show you what typical consumers actually paid for a given model in your region, based on your zip code. The sites also will detail any rebates the manufacturer is giving to buyers of a certain model. (Click on "incentives" once you have selected a vehicle.) Or if you want to scan for models with high rebates, MSN Autos has a full list of rebates. In addition, Edmunds.com shows manufacturer-to-dealer incentives—money paid to the dealer to move a certain model. When you see such an incentive, take it into account in setting your target price.

Don't let the salesperson bring the rebate into the negotiations.

How much timing will help you depends on what you're shopping for. "Price targets depend so much on the model," says Jack Nerad, editorial director and executive market analyst at kbb.com. "The Mini Cooper keeps selling at or above MSRP, but on some cars and trucks you can get a deal below the invoice price." If you are shopping on a model where price cuts are likely, both Nerad and CFA's Gillis emphasize the importance of shopping at two or more dealers and letting them compete for the best price.

Here's a look at the best times to shop, with examples of what it might mean for shoppers of particular vehicles.

End of month buying

In the last few days of the month, showroom salespeople are eager to meet their monthly targets, which would boost their pay. So especially if you are shopping for a slow-selling model, you can aim for a deal near invoice price and sometimes even below. (The dealership still will get some profit from the so-called holdback, which it gets later from the manufacturer.)

The time of month or year when you shop for a new car really does matter.

Let's say you were shopping for a 2007 Dodge Caravan minivan--a vehicle that has been including (March 2007) a $3,000 customer rebate. With popular options, the minivan's MSRP was $21,705. Kelley Blue Book says the typical transaction price is $21,086. But in an end-of-the-month deal, negotiating hard might get you down to the dealer's invoice price of $20,373. Then you could subtract the $3,000 rebate for a net price of $17,373. Make sure you don't let the salesperson bring the rebate into the negotiations. You are entitled to that from the manufacturer no matter what price you negotiate otherwise.

Profiting from changing model years

As auto companies get ready for their annual new-model introduction, dealers are eager to get rid of the old models--especially since dealer volume targets set by the manufacturers track the model year. With this strategy, you may be limited in your choice of the exact color and optional equipment you ideally would pick. Offsetting that is the best deal you're likely to find any time.

Buying a leftover vehicle from the current model year can mean huge savings.

Usually such model-year shopping works best in July, August, and early September, ahead of the traditional Oct. 1 start of the model year. But in recent years, companies have begun introducing some new models earlier. Take the 2008 Ford Escape, a fully redesigned vehicle that reached dealers in spring 2007. So buyers who still like the 2007 Escape can aim for an excellent deal. For an XLT model with a V6 engine, two-wheel drive, and popular options, the MSRP is $24,985 and the dealer's invoice cost $23,482. Edmunds.com shows a typical transaction price of $23,652, but also notes a $500 marketing incentive to the dealer. So with hard negotiating and competing dealers, you might get $400 of that $500 dealer incentive. With that extra $400 below the typical transaction price, that would bring you to $23,252--or $230 less than dealer invoice price. In addition, the manufacturer has been offering a total of $3,000 in customer rebates. So your bottom-line total--before local taxes--becomes $20,252.

Any time when few people are out and about is a good time to be car shopping.

Holiday shopping—not at the mall

It can get lonely on the sales floor of a car dealer in late December when almost everyone is at the mall rushing to finish holiday shopping. So if you show up at the dealership with a well-prepared plan, you may get a great deal for Christmas. Let's say you're shopping for a Honda Accord--one of the two most popular sedans in the U.S. market. The Accord has some price flexibility because it hasn't been redesigned since 2003--unlike its chief rival, the Toyota Camry. List price for the LX-model Accord with a four-cylinder engine and automatic transmission is $21,520 and the dealer invoice is $19,654. No rebates are available. (Honda rarely offers customer incentives.) Kelley Blue Book shows the average customer paying $20,299--or $645 more than the invoice price. By the holiday season--with another model year also having ended--aim to get that Accord for $19,784 or $200 above the invoice price.

Whenever you're negotiating, always start from the invoice price, not the MSRP.

Even if you get a great deal, don't forget a cardinal rule of car buying: Plan ahead for your financing. "Some people will negotiate to the last dime on their car's price and then let themselves be talked into a lousy financing deal," cautions Nerad of kbb.com. So get financing preapproved from your credit union or other source before you ever go car shopping.

Don't count on being able to get the 0% financing you see in ads; those deals are in place of—not along with—any rebates. And only consumers with the very best credit ratings qualify for 0% loans. At the end of the month, end of the model year, or at the holidays—or for that matter any other time—doing your homework and lining up financing will mean saving money on a new car.

Jerry Edgerton is an automotive writer whose work has appeared in Money and other national magazines. He also is the author of "Car Shopping Made Easy."



NCUA Equal Housing Lender

  Home & Family Finance® Resource Center
  Copyright © 1997-2013 Credit Union National Association Inc.

 
Your Credit Union