Why January is the best time of the year to buy a new car
Written By Douglas Matus
It can seem counterintuitive to make a large purchase right after the holidays, but for those interested in a new vehicle, January presents a golden opportunity. The reason for this comes from a confluence of factors that affects car sales year-in-year-out.
If you can’t afford to pull the trigger on a new car this month, you should, at least, understand the reasons that make January a great time to buy. That way, when you do have the ability to upgrade your wheels, you can plan your purchase to maximize your savings.
Slow Month for Retail
The free spending of the holidays causes consumers to tighten their belts with the onset of the New Year. As people struggle to pay off Christmas debt, extra money goes toward smaller comforts, while expensive items remain unsold. Retail analysts have long pinpointed January as the best month to buy major appliances, and the same rationale can inform strategic vehicle purchases.
Despite the fact that January is a slow month, car dealerships still have to make money. Because of this, vehicles occupy a buyers’ market, with salespeople eager to close deals and meet their quotas. This rationale applies to all winter months — not just January — with great deals on cars also available in February and early March.
The trends that inform January as a slow retail month apply even more to luxury cars. With spending flat, the most expensive vehicles become the hardest to move.
If you are specifically in the market for a flashy “summertime” car — something in red, or with a sunroof — the cold months are absolutely the best time to buy. The previous month’s end-of-year clearances also create deals for expensive vehicles.
“Typically when supplies are low, only higher priced models are left over,” says Melissa Granke of OhioCarGirl.com. “The less equipped vehicles sell faster, since they’re less expensive.”
As dealers slash prices to meet their end-of-year quotas, consumers snap up the cheapest cars first. Come January, it’s the luxury cars that become the leftovers.
Though the “model year” traditionally rolls over in the fall, there’s no denying the mental association of a new calendar year. Any 2015 models still on the lot in January 2016 will need to get sold, and fast, if dealers want to realize a return on their investment.
Car dealers make the most money on the newest of cars; if a car remains unsold more than a full year after its debut, buyers can expect huge savings off the sticker price. Mike Rabkin, president of From Car to Finish, explains:
“Dealers will make short deals to hedge their bets and make sure they hit their quota. Additionally, there can be temporary dealer rebates to clear out a model year, so dealers can sell a vehicle for less when they have the use of said incentives.”
Other Tips to Save
If you plan to take advantage of the special incentives that January offers to car buyers, you may as well utilize additional strategies to save even more money. The time of week and month can make a big difference. Avoid weekends, as a rush of customers will make salespeople less likely to deal. Likewise, you will find much more amenable salespeople at the end of the day, as opposed to the morning or early afternoon.
When you begin your search for financing, you can also isolate ways to save money.
“Try credit unions, regional banks or community banks, and always negotiate,” says Harrine Freeman, financial expert and CEO of H.E. Freeman Enterprises. “Leverage your current bank relationship and ask for perks such as discounts on a loan for automatic payments.”
If your credit score is not high enough for you to get an interest rate on a loan that you can afford month to month, then try using an affordable financial product like Self Lender to help you build credit history over the next 12 months. Come January 2017, you'll be ready.
Lastly, always come to the dealership prepared with an amount that you can spend and an idea of the type of car you want. Regardless of how great a deal appears, do not let yourself get talked into more car than you can afford. The perfect car becomes even better when you get it at an amazing price — in January or any time of the year.