For most people, unless you live in a city with great public transportation or within walking or biking distance to work, you will probably need a car to get you where you need to go.
With the average person owning 9.4 cars in their lifetime, and the average new vehicle transaction price hitting an all-time high of $34,077 in 2016, if you are shopping for a new car, knowing when to buy a car could save you hundreds or maybe even thousands of dollars.
Sometimes you might need a new car sooner than later. Maybe you were in an accident (hope you are okay!). Maybe your car needs major repairs that cost more than what it is worth. Or maybe an asteroid hit it. For whatever the reason, if you cannot wait and need a car right now, that is ok. As long as you remember the main rule of buying a good, reliable car and driving it into the ground, you will still come out ahead of those who go buy out and a new car once they are through paying off their old one.
If buying a new car isn’t quite that urgent and you are able to wait a bit, you could save more money than if you immediately headed out to the car dealership tomorrow.
The Best Time of the Year to Buy A Car
So when should you buy a car if you want the absolute best deal?
Yes, it really is that simple. Why this is the case is because of quotas. The salespeople have quotas they want to hit to earn their commissions and bonuses. The dealership has sales goals they need to meet for bonuses from the car manufacturers themselves. These quotas come in the form of monthly, quarterly, and yearly sales numbers they need to achieve.
I experienced this first hand when I purchased my last car at the end of December. I was planning to pay cash, and the finance manager needed the funds before the year ended so they could close out the sale.
Not only that, the more cars a dealership sells, the higher the number of future allocations they will receive. This is how certain dealers are able to get high demand, sought after vehicles like the Dodge Challenger Demon that aren’t available from some other dealerships.
TrueCar analyzed the sales data from 12 million transactions over 5 years to determine the percentage off MSRP that people received broken down by the day. Taking the average savings for each month, we get the following data:
To get the most savings in December, you can wait until New Year’s Eve. According to TrueCar, you can save up to 8.3% off the price of a new car on this particular day. This is because this is the last day a dealer can make their monthly, quarterly, AND yearly goals.
What If You Cannot Wait Until December?
Does this mean if you need a car in January, that you should wait almost an entire year?
Not at all.
Sometimes we need a car soon than later. Remember how salespeople and dealerships have monthly quotas too? If you need a car and are able to hold off until the end of the month, going into the dealership during the last 3 days of the month will get you the best possible bargain of the month.
Taking the data from TrueCar’s diagram, the below chart shows that car shopping during the last 3 days of the month results in about 0.6% higher discounts than the rest of the month.
|Month||Last 3 Days Average||Rest of Month Average|
With the month coming to an end, dealers may be a few cars short of hitting their sales quota. If hitting the quota means a big bonus, they may be more motivated to give a big discount or even take a loss to close the deal if it means earning more money from the bonus.
The Best Day of the Week to Buy A Car
Need a car now? Get the most savings by buying on a Monday.
Most people go car shopping on the weekends because they have to work during the week. For car salesmen, the dealership is their work and no one wants to spend an entire day at work and make no money.
According to TrueCar, Monday offers the maximum savings. You can save on average 0.61% more on Monday than if you went to purchase a car on a Sunday.
The below table shows the average savings off MSRP based on the day of the week.
|Day of Week||Average Savings|
With less foot traffic into the showrooms, you’ll get more personalized attention and salesmen are more likely to make a deal because they don’t know if another potential customer will walk through the doors. The saying “a bird in hand is better than two in the bush” comes to mind. Less commissions is better than zero commissions.
What About Those Memorial Day-July 4th-Labor Day-Thanksgiving-Mother’s Day Sales Events?
It seems like almost at every holiday weekend, car companies are promoting yet another sales extravaganza with balloons, free food, waving tube men, and dancing clowns to get people to come in to test drive and buy a car.
These blowout sales events may actually save you a bunch of money when car manufacturers are offering cash-back rebates and special financing deals.
For instance, Toyota was offering a 0% financing for 6 years plus $1,000 bonus cash promotion during a Labor Day sale. While I usually say you are better off paying cash to buy a car instead of paying a ton of interest on a depreciating asset, taking a 0% financing deal actually makes a lot of sense if it means you can put that money to work for six years earning more money for you in the mean time.
While you may not want to spend a holiday weekend inside dealing with a car salesman who is trying to sell you floor mats and extended warranties, getting a great deal might make it worth the annoyance.
Other Ways To Save Even More Money When Buying A Car
Now that you’ve decided you will be buying your next car on the Monday in the last week of December, here are some additional ways to maximize your savings.
End of the Model Year
If you don’t care that the next year’s model has an extra cupholder, buying an outgoing model could net you some big discounts. People who like to impress their friends and family with having latest and greatest item will prefer not to buy a brand new “year old” car when the next year’s models are showing up on the dealer lots.
End of Design Cycle
When some people who are set on a particular car and know that a manufacturer will be doing a complete redesign, they will wait until next year before purchasing. Again, some people are trendsetters who want to impress others and don’t want to be seen driving something that is obviously an older model that everyone else already has.
Smart buyers like us know better though. You are better off letting those people be the guinea pigs while the manufacturer works out all the squeaks and rattles in the new design. If you don’t care about the latest styling and technology, you can receive some serious savings on the outgoing design.
End of Car’s Life
Sometimes an automaker will discontinue a car model for a variety of reasons. Maybe that particular model did not sell well, buyer’s tastes have changed, or they want to make room in their lineup for a new model. Sometimes entire brands will go out of business such as Pontaic, Saturn, or Saab.
In some cases, a model being discontinued will result in their resale value dropping. If you plan to keep the car for a while, this shouldn’t affect you and you can receive deep discounts as dealers try to quickly sell off their remaining inventory.
Do you consider the time of the year when purchasing a car? Do you have any tips on how to get the best price on car?