Buy Now or Wait?
"It used to be that if you waited for year-end discounts you paid more than you wanted because those end-of-the-year cars were loaded with options that would offset any discount," said Art Spinella, general manager of CNW Marketing Research, a Bandon, Ore.-based company that specializes in why people buy the vehicles they do. "But today people are premium shoppers and load cars with 90 percent of the options offered anyway, so by waiting for year-end discounts it's not that you have to pay more for options as it is, you end up having to settle for the silver car because the blue ones are all gone."
Spinella says the number of people who wait to buy at the end of the model year is on the rise.
"It used to be that consumers kept their cars three to four years before trading them in. Now they keep them six to seven years. The high cost and length of financing contracts has forced some to keep their cars longer, while others simply don't buy a new car as often because there are other things they want to spend their money on," Spinella said, referring to items ranging from homes to high-tech audio and computer systems.
"Since cars don't change that much from one model year to another, and most people don't recognize styling changes as much as they used to, there's not the cheapskate stigma that you waited until year-end to buy to save money," he said.
One drawback, of course, is that while waiting until year-end to buy in order to get a 5 to 10 percent discount, you also quickly absorb about 35 percent in depreciation on the 2007 model, as the new 2008 model comes out so soon.
But, at the same time, Spinella said, by waiting until year-end you not only get a discount, you avoid the price increase that comes with the new model, which helps offset some of the loss from depreciation.
"If you only keep a new car three years, you lose big from depreciation when buying at year-end, but if you keep a car six to seven years, you don't lose as much on depreciation because 6- to 7-year-old cars are in good demand as used vehicles, and that means you'll get a good chunk of change for yours when you trade it in," he said.
"If you trade your car in one to three years, buy at the beginning of the model year or in January or February when the weather means that not only do the automakers give incentives, the dealers toss some of their own money into the kitty to help sell cars," he said.
And what, perhaps, are the best year-end buys in the market?
"Big SUVs; they are knocking thousands off on those vehicles," Spinella said.
Related
When an Auto Writer Buys a Car: Part I (KickingTires)
More Cay Buying News (KickingTires)
Previous
Subscribe to our feed
Email us your tips!
What if you are looking at leasing? Is it better to lease now or wait? I'm looking at a Ford Edge. Any thoughts?
In MA we have excise tax on cars so buying later in the year helps since you pay a prorated amount and the next year they depreciate it one year's worth. Not sure how many other states get to enjoy excise tax but it can save a substantial amount on to the cost of a new car if purchased later in the year.
I spoke with my local gas pump about buying a large SUV and it responded:
DING, DING, DING, DING, DING, DING, DING . . .
Apparently gas pumps are also enthusiastic about large SUVs.
Bob Wilson
To: whom it may concern is best to buy a use car or lease now in july or should i wait aug, sept, or oct is same as buying a new car which one of the months are good to buy need some advice is the year in discount the same for the used or just the new car what dealer should go to what kind of questions would i need to ask that covers the warranty how would warranty be cover for maybe can someone give call for advice what I should do 513 376-4605
As for warranty, here's the deal:
If you buy the car today, the warranty starts today. The only EXCEPTION is the mileage!
Example 1: Buy a new 2006 or even 2005 car on Aug 1, 2007 (date on sales agreement). Manufacturer warranty says 3 yr/36000 mile. The warranty end date of that 2005 or 2006 BRAND NEW vehicle is still 2010, July 31st (assuming mileage < 36000 mi). See, it makes no difference if you buy 200X vehicle as long as they are brand new. Even if you, for any reason, drive it off the dealer's lot 1 month later, the warranty end date remains 7/31/2010.
Example 2: Same scenario, except that the car has 100 mi on it already (a test-drive car). The manufacturere warrant, TECHNICALLY speaking, is still 36000 mi. However, you can negotiate with your dealer such that you can make it ends at 36100 mi, AS LONG AS IT'S ON THE SALE AGREEMENT.
As to buy now or later, I would say buy NOW, if there's special reabte or financing/lease or both going on already.
Reason #1: Car dealership won't see car at loss. You may hear them saying so, but on paper, the LEAST that they can do is not to make a penny on that vehicle. If the interest rate is good with special APR, and there is already rebate, then once you do the Math, say another $500 discount if you buy 3 months later than now, you are basically paying ~$1.1 to $1.2 more per day for the next year, but that's if you can still buy the same vehicle with the same pkg 3 months later! (see reason #2)
Reason #2: The left over either (a) have high mileage on it already (usually "test-drive" or demo car) or (b) no choice in option or color. The most popular options are usually gone by then, so you either have to settle for a fully loaded model (with a bunch of stuff that you don't need - and possibly never use) and a barebone model (MAN-POWER everything! No security system, cheapo radios, no ABS, etc.). So rather than spending $$$ on a car that you want, you are spending about the same $$$ on something that you don't really want (as it doesn't satisfy your true need!). You just wasted that $$$ now and will regret it the minute you start driving the car (like complaining, oh, I don't have this, or that...this car is just temporary, and I'm gonna sell it later on).
Reason #3: Depreciation. If you buy an end of model car when the new one has already come out,
(1) because of reason #1, you won't recover the same type of "year" depreciation loss. For example, say once the 2008 has come out, the 2007 is valued at $3000 less than before on blue book. The dealer will probably think you are crazy if you ask for an add'l $3000 discount on top of whatever you are already getting. IOW, you are already buying a negative valued vehicle.
(2) If you buy a few months before the 2008 has come out, then at least you are still enjoying a few months of 2007 value (w/o the depreciation, which you will probably get back the minute you drove off the dealer's lot (e.g. 30% is gone once u left dealer's lot. Since today's car is over $10K anyways, you'll probably lose $4000 right there. When the year model end comes, you won't be affected by the depreciation since the 2 aren't cumulative, so you'll probably lose that $4000 and not another $3000 which equals to $7000). Besides, you are still getting a positively valued vehicle!
Of all thgs there will be exception. For example: Honda Accord has no special at all right now, but you know the 08 is brand new. Then it's better to wait 'til they come out 'coz there will be huge discount compare to NO discount right now.