What Is the Best Time of Year to Buy a Car?
December 7, 2023 December 7, 2023 /
If you are planning to buy a new car, you might be wondering what is the best time of year to do so. After all, buying a car is a major financial decision that can affect your financial independence and lifestyle. You want to get the best deal possible and avoid paying more than you need to.
There are many factors that can influence car prices throughout the year, such as supply and demand, inventory levels, model year changes, holidays, seasons, and market conditions. In this article, we will explore some of these factors and give you some tips on how to find the best time of year to buy a car.
This article is primarily for those who are looking to buy. However you should decide which is better, leasing a car or buying a car before making your ultimate decision.
Key Takeaways
| Factor | How It Affects Car Prices | When to Buy |
|---|---|---|
| Supply and demand | When demand is high and supply is low, car prices tend to increase. When demand is low and supply is high, car prices tend to decrease. | Buy when demand is low and supply is high, such as during a recession, a pandemic, or a natural disaster. |
| Inventory levels | Car dealerships need to clear out their inventory to make room for new models and avoid paying fees. They may offer discounts and incentives to move older or less popular cars. | Buy when inventory levels are high, such as at the end of the month, the quarter, or the year. |
| Model year changes | Car manufacturers release new models every year, usually in the fall. The new models may have updated features, designs, or technology that make them more attractive to buyers. The older models may lose value or become obsolete. | Buy when the new models arrive, as dealers may offer lower prices or incentives to sell the older models. Alternatively, buy when the next year’s models are announced, as dealers may lower prices to clear out the current year’s models. |
| Holidays | Car dealerships often run sales and promotions during holidays to attract customers and boost sales. They may offer discounts, rebates, financing deals, or freebies. | Buy during holidays that are known for car sales, such as Memorial Day, Labor Day, Black Friday, or New Year’s Eve. |
| Seasons | Car prices may vary depending on the season and the type of car. Some cars may be more in demand or more suitable for certain weather conditions or driving needs. | Buy during the off-season for the type of car you want, such as buying a convertible in winter or a four-wheel drive in summer. |
What Impacts the Prices for Automobiles Overall?
Car prices are not fixed or constant. They can change depending on various factors that affect the automotive industry and the economy as a whole. Some of these factors include:
- Inflation: Inflation is the general increase in the prices of goods and services over time. It reduces the purchasing power of money and makes everything more expensive. According to the Bureau of Labor Statistics, the annual inflation rate in the U.S. was 8.6% in May 2023, the highest since 1982. This means that car prices have also increased significantly compared to previous years.
- Supply chain disruptions: Supply chain disruptions are events that interrupt the normal flow of goods and materials from the source to the destination. They can be caused by natural disasters, pandemics, wars, strikes, cyberattacks, or other factors. They can affect the availability, quality, and cost of the inputs and outputs of the car manufacturing process. For example, the global semiconductor chip shortage that started in 2020 has severely affected the production and supply of new cars, leading to higher prices and lower inventory levels.
- Market conditions: Market conditions are the forces that influence the supply and demand of goods and services in a given market. They can be affected by consumer preferences, tastes, income, expectations, competition, regulations, and other factors. They can create fluctuations in the price and quantity of cars sold in the market. For example, during a recession, consumer confidence and income may decline, leading to lower demand and lower prices for cars. Conversely, during a boom, consumer confidence and income may increase, leading to higher demand and higher prices for cars.
Why Would You Wait to Buy a Car?
Buying a car is a big financial commitment that requires careful planning and research. You want to make sure that you are getting the best value for your money and that you are not overpaying or regretting your purchase. Therefore, there may be some reasons why you would want to wait to buy a car, such as:
You are not ready financially:
Buying a car involves not only paying the sticker price, but also paying for taxes, fees, insurance, registration, maintenance, repairs, gas, and depreciation. You need to have a realistic budget and a reliable source of income to afford these expenses. You also need to have a good credit score and a low debt-to-income ratio to qualify for a favorable loan or lease. If you are not in a good financial position, you may want to wait until you improve your situation and save up for a down payment.
You are not sure what you want:
Buying a car is a personal decision that depends on your needs, preferences, lifestyle, and taste. You need to consider various factors, such as the size, style, performance, features, safety, reliability, and fuel efficiency of the car. You also need to compare different models, brands, and dealers to find the best option for you. If you are not sure what you want or need, you may want to wait until you do more research and test drive different cars.
You are waiting for a better deal:
Buying a car at the right time can save you a lot of money and hassle. As we discussed earlier, car prices can vary depending on the season, the month, the day, the holiday, the inventory level, the model year change, and the market condition. If you are not in a hurry, you may want to wait until you find a better deal that meets your budget and expectations. You can also use tools like Kelley Blue Book, Edmunds, or CarGurus to track the prices and incentives of the cars you are interested in.
What Are the Ongoing Maintenance Expenses and Other Costs of Owning a Car?
Buying a car is not a one-time expense. It is an ongoing investment that requires regular maintenance and care. According to AAA, the average annual cost of owning and operating a new car in 2022 was $10,728, or $894 per month. This includes the following expenses:
| Expense | Average Cost Per Year | Average Cost Per Month |
|---|---|---|
| Depreciation | $3,975 | $331 |
| Fuel | $1,898 | $158 |
| Insurance | $1,325 | $110 |
| Maintenance and repairs | $1,279 | $107 |
| License, registration, and taxes | $753 | $63 |
| Finance charges | $683 | $57 |
| Tires | $115 | $10 |
Depreciation
Depreciation is the loss of value of the car over time due to wear and tear, age, mileage, and market demand. It is the largest expense of owning a car, accounting for 37% of the total cost.
Fuel
Fuel is the second-largest expense, accounting for 18% of the total cost. It depends on the gas price, the fuel efficiency, and the driving habits of the car owner.
Insurance
Insurance is the third-largest expense, accounting for 12% of the total cost. It depends on the type, age, and value of the car, as well as the driver’s age, gender, location, driving record, and credit score.
Maintenance and Repairs
Maintenance and repairs are the fourth-largest expense, accounting for 12% of the total cost. They include the costs of oil changes, filter changes, tire rotations, brake pad replacements, wiper blade replacements, battery replacements, and other services that keep the car in good condition.
License, registration, and taxes
License, registration, and taxes are the fifth-largest expense, accounting for 7% of the total cost. They include the fees and taxes that the car owner has to pay to the state and local authorities to legally own and operate the car.
Finance charges
Finance charges are the sixth-largest expense, accounting for 6% of the total cost. They include the interest and fees that the car owner has to pay to the lender or the dealer to finance the purchase of the car. Tires are the smallest expense, accounting for 1% of the total cost. They include the costs of buying and installing new tires when the old ones wear out.
These expenses can vary depending on the make, model, age, and condition of the car, as well as the location, usage, and preferences of the car owner. Therefore, it is important to consider these expenses before buying a car and to budget accordingly.
So When is the Best Time to Buy a Car for You?
Buying a car is a major financial decision that requires careful planning and research. There is no definitive answer to the question of what is the best time of year to buy a car, as it depends on various factors that can influence car prices throughout the year.
However, some general tips are to buy when demand is low and supply is high, when inventory levels are high, when new models arrive or are announced, and during holidays that are known for car sales.
You may also want to wait to buy a car if you are not ready financially, not sure what you want, or waiting for a better deal.
Moreover, you should be aware of the ongoing maintenance expenses and other costs of owning a car, such as depreciation, fuel, insurance, maintenance and repairs, license, registration, and taxes, finance charges, and tires. By following these tips, you can find the best time of year to buy a car that suits your needs, preferences, and budget.
