Is now the best time to buy a new car? Well, it depends
Dealers could be keen to move last year’s models off their lots, but there are risks
Traditionally, autumn has been a great time to get a great deal on a new car. New models are showing up in showrooms, and dealers want older models out of their lots and off their balance sheets.
Has anything changed? Generally, it’s still the time when many manufacturers debut their new models, but it’s not cast in stone. If you have a specific model in mind, do some research to see when the new version will debut. It can be any time of year.
If you’re leasing, don’t look for big deals at model year-end. You’re essentially leasing a car that is already a year old, and that lowers its value when it comes back off lease, a value determined by the leasing company. Your monthly payments will reflect that loss of value.
Now is the time for those with cash in hand, and a specific vehicle in mind. According to George Iny, president of the Automobile Protection Association (APA), “the best deals for a cash or finance buyer are on a model that is being discontinued, or due for a significant redesign ... large rebates of $4,000 or more are possible.”
His warning? Discontinued vehicles frequently depreciate more quickly after they’ve been discontinued, so make sure it’s a car you really like, and one you plan on keeping.
Industry consultant John Raymond notes that dealers “finance their inventories and pay insurance on that inventory.” Every spot on the lot taken up by a car is costing them money.
If you’ve had your eye on something you know is heading to its end of the line, know that sometimes, there are models that people are chasing down. For example, according to a couple of Hyundai dealers I spoke with, the outgoing 2019 Santa Fe XL is one of them. End of the line doesn’t always mean end of the want.
Be aware of an oft-used practice employed by some dealers: Pre-registering vehicles to show them as “sold” to qualify them for bonuses and rebates. Says
Iny, “when this is done, the dealer has already earned an incentive (this protects them from the withdrawal of support later), but the warranty starts to run from that date.”
Especially on cars about to be orphaned by manufacturers and incentives, pay attention to see if the car has been registered already. It’s not inconceivable that you think your warranty should begin the date you buy the car, not months beforehand. Your warranty date should be clearly written on your bill of sale, but be sure to double check. According to Iny, manufacturers are well aware of the practice, but they juice numbers and reportable sales look stronger, so they look the other way.
Finally, what about those Christmas specials? You’ll start seeing suspended payments, sometimes for up to three months, along with holiday rebates as well as other incentives. Again, if it’s on a vehicle you know you’re interested in, there are good deals to be had. Be aware of the difference between suspended payments, though — you still owe the amount, it’s just been kicked down the road — and make sure they’re suspending the interest, too. A deal where they reduce the price by that amount (which should bring down taxes, too), or give you a rebate or gift card, apply it to your car loan.
Do your research and ask a lot of questions. This could absolutely be the best time to buy a new car.