When is the right time to buy a car?

Why the last day of the month is better for consumers

U.S. Air Force photo/Senior Airman Grace Lee
The best deals on new cars can usually be found toward the end of the month, when dealerships need to make their quotas.

Greetings from The Hemet Car Guy,

Is there a best time to buy a car? That’s one of the most common questions I am asked. Statistically speaking, in the last five years, transactions during the month of August have the lowest average price, so August and September, especially toward the end of the month, may very well be the best time of the year to buy a new car.
Car dealerships are sales-driven organizations with regular monthly sales goals and quotas that need to be met. At the beginning of the month, everyone is usually optimistic and thinks they’re going to sell more cars than they did the month before. They may not be willing to entertain low-ball offers since it’s still early in the game.
As the month progresses, some dealers may find themselves performing very poorly compared to prior months and they start getting a bit desperate.

Why the last day of the month is better for consumers
Manufacturers provide dealers with incentives, and these incentives are almost always based on selling a certain number of cars before the end of the month. Some high volume dealers are set up to make profits based solely on these sales-driven incentives, also known as a “factory retro bonus.” If they don’t hit their monthly goals, they stand to lose a lot of money that they were counting on.
Some people think it’s important to negotiate your purchase toward the end of the month because it’s the best time to weed out the desperate and hungry dealers who are willing to sell you a car (sometimes at a loss) in order to hit their sales goals.
And if the sales incentives weren’t enough, some manufactures also have a system in place called “turn and earn.” They allocate future supplies of vehicles based on how many each dealer sold in the previous month. If a dealer wants a continuous supply of popular cars, they need to consistently sell a large amount of them each month.
But don’t get too caught up on when it’s the best time for dealer sales – buy the car when you are ready. For most people, a car is the third-largest purchase they’ll ever make, next to a house and an education. For this reason, it’s worthwhile to spend a substantial amount of time on the process to ensure that you end up with the best car for you at the best price you can get.

Get your money’s worth – don’t be a frequent trader
Once you’ve decided to buy a car, be sure to understand that a car is NOT an investment. I’ve had customers buy a car with a minimum down payment, finance it for five or six years, and then decide that they want to trade it in within the first year. They can’t understand why they owe more money than it’s worth. It’s easy to become upside down in a car loan because this is a purchase that does not appreciate – simply driving the car off the lot reduces its value quite a bit.
There are exceptions to this rule, such as some antique and collectible cars, which can appreciate in value. But for virtually all other cars, their value depreciates with every mile you put on them. So look at the car as an expense rather than an investment.

Hope this helps, and Good Driving,

The Hemet Car Guy

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