When is the best time to buy a car? At the end. The end of what? Well, the end of the day, week, month, or year. But why?
Car dealers want to go home, too. They also want to close the deal. Letting you go before you sign the papers leaves them open to losing that deal. You might change your mind or find a better deal—and that is something the dealer doesn’t want to have happen. If they close the deal before dinner time, it’s one more commission check in their pocket.
Dealerships only have so much room to store cars. Many have lots offsite from their retail location to store overflow, but it’s still limited. Bringing in new inventory for a dealership isn’t like you stocking your fridge, where you can see how much space there is. They either have to predict how much room they will have or, in some cases, they have to take the inventory the manufacturer sends them even if they don’t have room for it. Sometimes dealers are willing to cut a deal on a car because they have a delivery coming and need to clear up a few spaces.
There are two reasons dealers are willing to cut a deal at the end of the month: sales numbers and loans.
Most salespeople have a quota at the start of the month. Meet the quota and they get a bonus. Miss it and not only do they miss the bonus, but their base pay in commission is also at risk. Even if it hasn’t been a slow month for sales, dealers want to show bigger numbers. The individual salespeople look better if they sell over quota. The dealership can show those numbers to the manufacturer and get more access to desirable models and trims.
The other reason is the loans. The dealership doesn’t own any of the cars on their lot. Banks own the cars and the dealership pays interest on the loan until the car is sold. The sooner the car is off the lot, the less the dealership pays the bank for a car that’s just sitting there.
In the car world, the end of summer is basically the end of the year. Next-model-year cars come out earlier and earlier. Dealerships don’t want 2019 models on the lot when 2020 rolls around because people tend to want the newest model if they’re buying a new car. However, manufactures usually only update minor things between most model years. The only difference between the new model year and the old could be a paint color you don’t like anyway.
Many of the other factors like lot space and loan interest can be motivators for end of the summer deals. Most manufacturers have long switched production to the new model year by then, so any of the current year vehicles on the lot have been racking up interest and are losing appeal by the day.
The end of a style before a refresh can also be a good time to buy a car. If you have your heart set on a particular model and you hear there is going to be a refresh on the design next year, buy now. The engineers have fine-tuned that model as much as they could, so the chances of major issues are minimal. If a model is discontinued, there is a good chance to get a bargain—dealers need the space and most models are discontinued because sales have slumped.
In the end, the end is a good time to look for a vehicle if you’re in the market. Be aware that dealerships know these tricks, too. Don’t go in expecting to blindside them, but most are willing to work with you.
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