Team AckoApr 12, 2023
For a percentage of the population, buying a car is a significant investment, perhaps only second to buying a home. So buying a car requires a lot of time and research to get one that suits you the best. But when is the best time to buy one? The discounts and offers during the end-of-year car sales can sound too good to be true. As tempting as it may be, there are things you should be aware of before you make that deal. Keep reading to know the pros and cons of buying a car at the end of the year.
Who doesn't like to save money wherever one can? End-of-year car sales are a great time to buy a car if you want a good deal and have some cash in your pocket. Automakers rush to clear their inventories at the end of the year. The goal is to sell everything they currently have in their lot to make space for the new models that automobile companies roll out at the start of the new year. If they don't try to sell them off now, what are the chances of them being sold once the latest ones come into the showroom? Hence the enticing deals. Straight-up Cash discounts, extended warranties and a range of free accessories are on the table. If you are a good negotiator, this is the right time to buy yourself a car. The dealers are desperate to close deals, so take advantage of this.
At the beginning of every year, virtually all automobile manufacturers hike the prices of all the models in their stables due to inflation, causing a rise in input costs. When you can pick up a particular car at one price, why would you want to wait for the next year to pay more for the same vehicle? Manufacturers also know this and use this fact as part of their sales pitches. So if your primary goal is to save some moolah and you are not crazy about having all the latest tech, this is a good time to finalise that deal.
The street smart among us will tell you that selling your vehicle is always better than exchanging it if you want a good deal. This is because when you go to exchange your vehicle, the dealer gives you an offer that's about 10-15% lower than the current market value of your car. That is his margin to refurbish it and sell it again. If you are someone who doesn't want to get into the hassle of looking for a buyer yourself, then you should exchange it for a new one at the dealership. The best part about going in for an exchange at the end-of-year car sale, is that dealers are also desperate to sell every car they can. Use this to leverage a better deal for your old vehicle.
Everything that glitters is not gold. You need to understand that manufacturers have an ulterior motive when they come up with such lucrative offers. No business wants to give away so much for free. So why do they do this?
A car is something that people invest in, intending to keep for as long as possible. As we have discussed, the entire purpose of the year-end sales is to clear inventory. Another tip is that the offers tend to be 'too good to be true', on those models that the dealers have had trouble selling throughout the year. You may feel that you are getting an amazing deal now but stand back and consider why this model was not selling that well. Some research will go a long way. So if you go in for a car at the end of the year, you are essentially buying a model that will be rendered outdated in a month.
Not everything in life goes according to plan. If, for some reason, you decide to sell your vehicle earlier than anticipated, the resale value of your car comes into the picture. This brings up the subject of deprecation. Your beloved car will lose about 10-12% of its value annually due to depreciation. There is nothing you can do about it. Now, depreciation is calculated from the year of purchase of your vehicle. Since you bought your vehicle at the sale at the end of the year rather than waiting for the latest model that would have come out a month later, your depreciation will be calculated from the previous year. That's another 10-12% lost on the vehicle's resale value over a one-month difference. To add to this, you now own an outdated model, which will further drive down your power to negotiate.
So, is closing the deal during an end-of-year car sale a good idea? If you are not too concerned with having the latest tech, can live with an older design and saving money is your priority, then the answer is yes. If money is not an issue and you are willing to wait to see what the company's new offerings are, before you make your decision, then the year-end sales are something you can ignore.
Understand that the dealer has an ulterior motive of trying to clear his old stock inventory. If they push you a little too hard towards a particular model, do some quick research about it. It could have one that has not been selling well for several reasons. Do plenty of research before you walk into a particular dealership.
First, know the actual market value of your vehicle. You can use third-party professionals to give you a valuation beforehand. Use this to negotiate a good price. Another good trick is to visit multiple dealerships. Once you know what one is willing to offer you, you can use that offer as a baseline to drive a hard bargain with another dealership.
Selling your vehicle will get you a better deal than exchanging it for a new one with the dealership. A dealership will, on average, quote you about 10-15% lower than the actual market value of your vehicle in the guise of refurbishing charges. If you are willing to make the extra effort to find a buyer, that is the way forward. If you don't want the headache of finding buyers and losing a little money, exchanging your vehicle will be easier for you. You can drive in with your old car and drive out with the new one.
Unlike many things you buy nowadays, a car is not something you can return if you decide that you don't like it anymore. Always test drive the vehicle you are interested in before you finalise anything. If you are particular about getting a specific model, contact other dealers and check if they have one available for a test drive. Be open to test-driving another vehicle the salesperson recommends; you may find a model you weren't considering earlier a better fit for your needs.
Financing via the dealership can work out to be expensive, especially if you don't have a very good credit score. It is best to talk to the banks beforehand and get the best quotes for interest rates from them. Once you have this information and if the dealership wants to earn your finance business, they will do their best to match the interest rates or, even better, try to better them. Never forget the power of competition; always use it to your advantage.
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