For most Americans, there is typically only one purchase you make that you have to negotiate for. Do you negotiate with the cashier at the grocery store? I didn’t think so. When it comes to buying a car, you need as much leverage as possible, and that’s led a lot of people to ask me, “Ray, when is the best time to buy a car?”
Depending on what you read online, you’ll find different answers to this question. The truth is, when you buy your car impacts how likely a dealer will be to negotiate on your car deal. If you don’t read anymore of this guide, at least keep this in mind. Although it’s hard to say exactly when the best time to buy a car is, there are a few general rules of thumb you should be aware of.
Let’s dive in.
The worst time to buy a car
Before we get into the best time to buy a car, I want to share with you the worst time. Negotiating a car deal is something we all do. Dealers have a bit more experience than you do (since they do it all day, every day), and that certainly puts you at a disadvantage when it comes to negotiating. Don’t put yourself in an even worse situation by coming to the dealership at the wrong time.
When is it the wrong time to buy a car?
When you need to! Salespeople can tell if you’re in a bind and need to get into a new vehicle. Whether it’s because you were in an accident, your current car simply stopped working, or your kid who was previously off at college moved back home for the summer, so now you need an extra set of wheels at the house, it doesn’t matter. Salespeople are trained to make car deals “now.” In the car business “now” is the most powerful word, and if you need a car, a salesperson and sales manager will use that leverage against you, because they know you are in need.
It may sound counterintuitive, but try to buy a car when you don’t need to. Or, get a really good poker face. One or the other.
The best time to buy a car
The best time to buy a car is the last week of December. If you can’t wait until the end of December to buy your new car, have no fear, there are other times during the year that are also worth considering.
The end of the month is good
Car dealerships make money in a variety of ways. Like we’ve written about in the past, dealerships make a considerable amount of money from their service departments, not from selling cars. This is true, but dealers still do make a pretty penny from their sales departments, and a lot of the profits they reap come in the form of incentives paid to dealerships by their manufacturers.
Factory to dealer incentives are set monthly, and they represent hundreds of thousands of potential dollars to dealers. We wrote and filmed an in-depth breakdown of how these incentives work, and it’s important to understand, because you’ll leverage these incentives to get the best deal possible when you’re shopping for your next car.
Begin engaging with a dealer during the last week of a month. Feel free to be candid and upfront with them. You are well within reason to say something along the lines of, “Hey, I know you have monthly incentives from the manufacturer. I’d like to help you hit your goal. I don’t need to make this purchase right now, but if we make a great deal, there’s no reason why I wouldn’t.”
Setting the stage with a statement like this will let the dealer know that you understand what their goals are, and that you can work collaboratively to get there.
The end of the quarter is better
When is it even better than the end of the month to buy a car? The end of the quarter? Why? You guessed it, even more factory money is at stake.
Many manufacturers recently switched from reporting their sales numbers monthly to quarterly. This means manufacturers have added pressure to show their shareholders that they are growing their business every three months. You can (and should) use this to your advantage. Customer incentives (such as rebates and financing offers) should be strongest in the last month of a quarter, and dealer incentives (the money dealerships are due to receive if they meet certain volume goals) is higher in the last month of the quarter.
Again, it helps if you are in a position where you can walk away — you don’t need the car right now. Pair that leverage, with the fact that you know the dealership has hundreds of thousands of dollars on the line, and you should be able to work out a very competitive deal.
The end of the year is best
So the end of the month is good, the end of the quarter is better, yep, you guessed it, the end of the year is the best. Why? Because manufacturers budget an incredible amount of money on end of year promotions and incentives (again, both customer facing and dealer facing).
The last week of December represents an awesome opportunity to get a great deal on a car. If you’re looking for a new vehicle, you’d be savvy to look at the previous model year (new models typically come out in July and August, so if you’re reading this in the year 2020, you’d look for a 2020 model year vehicle instead of a 2021 during the last week of December).
Aging inventory, a lot of incentives, and holiday spirit mean you are due for a great car deal.
So there you have it. The next time someone asks me, “Hey Ray, when is the best time to buy a car?” I’ll send them this link. After 43 years in the business, this is about as in depth an answer I can provide.