If you are in the market for a new car this may be the time to act. Economics 101 reminds us that there is an inverse relationship between price and supply. That is, when supplies increase, often times prices decrease. That’s exactly what’s happening with the current auto market.
Several factors have conspired to lower demand for new cars, thereby increasing inventories for many dealers. Weather has played the most significant factor. After all, who wants to go new car shopping in 10 inches of snow?
You can use this glut of inventory to your advantage. Auto makers and dealers are offering some sweet incentives to attract buyers to take some of this inventory off their hands. Be sure to do your homework before you step foot on the lot.
Manufacturer websites are a good place to start. For instance, Chevrolet.com has a deals and offers page which lists financing deals (Financing? No thanks; I’m paying cash for my next car), rebates and incentives. If a deal strikes your fancy, you can click “View Inventory” to see vehicles in your local area. Other manufacturers offer a similar service on their website.
Those looking to finance a deal on a new car will find financing rates still fairly low, but one would have to expect them to increase over time as changes in monetary policy will cause borrowing rates to rise.
Locking in a low rate now can save you a significant amount for a large purchase such as a car, but keeps the terms as short as possible – no one should pay on a car loan for 72 months, in my opinion. If you need that many months to buy a car you cannot afford it.
For many, this time of year brings the promise of a tax return. If you receive a large return this year, I’m hoping the first thing you will do is adjust some forms with your payroll office so you don’t get a large return next year. After all, why give Uncle Sam an interest-free loan all year?
The second thing you should do, if you are in the market for a new car, is use some or all of that tax return cash towards the purchase of a new(er) car. Don’t expect dealers to be pleased to hear you will be putting down a large down payment, or paying cash outright. Dealers and manufacturers make a lot of money on financing, and they are all too happy to sign up for 60 months of payments.
Keep your preferred payment method to yourself until after you’ve been quoted a bottom line price.
Remember that buying a new car is usually more expensive than buying a quality used car. If you have a hang up about buying a used car, remember that all cars are “used” immediately after they are driven off of the dealership lot.
You must judge every deal on its own merit, and not perceive a new car to always be more expensive than a used card, and vice versa.