With summer comes a new wave of new-car incentives as dealers seek to offload the 2009 models and make room for the soon-to-arrive 2010s. This summer, dealers are hungrier than in years past, with supply far outstripping demand. Before you rush to buy a flashy, advertised model, here are a few things to consider:
Traditionally, buying a nearly new model that is one or two years old can be a smart move, thereby letting the original owner, or lease company, take the initial depreciation hit. That tried-and-true rule doesn’t quite apply now. New cars are heavily discounted and among the incentives are commonly ultra-low interest rates. Consequently, paying a little extra for a new car may not cost that much more month to month, and it will have a longer service life and extended warranty protection.
While it is true that deals may not get better than what is available today, don’t chase the deals. Instead, focus on finding the best car for your needs, tastes, and budget. Do your research through buyer’s guides, reviews, user reviews, and quality surveys to narrow the list down to a manageable size. Then visit the showrooms, see what speaks to you and take some test drives. In the end, there are great deals to be had on almost all models.
Buying a new car in the summer means it will depreciate a full year’s worth in a matter of weeks. This is fine for buyers who rack up high annual mileage, or will hold on to a vehicle many years. However, it is not advantageous for a low-mileage driver expecting to trade in a car in just three to four years.
There is a pent up demand for the Car Allowance Rebate System (CARS), commonly known as “cash for clunkers,” credits. This program can help those who own an old gas guzzler and are interested in buying a newer, more fuel-efficient model. But there are a few stipulations, and the program is not for everyone. The CARS program begins August 1 and will run just until November. If you are not interested in CARS, you might want to purchase before the sales rush in August, which will reduce inventory (and therefore selection) and potentially elevate prices. (Learn about CARS here.)
When it comes time to buy the new car, remember to negotiate. It can be too easy to just accept the advertised deals, which admittedly can be pretty exciting. But in addition to the manufacturer-supported rebates, the dealer may receive hidden incentives and have some wiggle room of their own. Start low with your negotiations, subtracting the incentives from the dealer invoice, and work you way up. (Dealer invoice prices are available in our buyer's guide.)
Holidays are always a great time to drive a bargain, and this July 4th weekend will be no exception. Do your homework, choose wisely, and you can get a great deal, and stimulate the economy in the process.
Learn more about car buying from these DriveSmart articles:
How to Speak Car Specs
Do-It-Yourself Test Drive
Do Not Be a Payment Shopper
Getting an Auto Loan Today