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The best time to buy a car is when you need one. If your current vehicle is no longer reliable or has been totaled, you likely don't have the luxury of timing your purchase.
However, if you have some flexibility with buying your next car and want to get the best deal, some times of the year are better than others. And ultimately, it's important to feel financially ready. Here's what to consider before you buy your next vehicle.
Make Sure Your Finances Are in Order
As with any major purchase, it's best to avoid buying a car unless you have the means to do so. Create a budget to get an idea of your income and expenses, and how much room you have for a car payment—assuming you're not planning to buy the vehicle outright.
As you try to figure out how much car you can afford, you'll need to run some numbers. That's because your monthly payment is dependent on a few things, including:
- The sales price
- Your down payment or trade-in value
- The loan's interest rate
- The loan's repayment term
For example, let's say you're looking at a car with a $15,000 sales price that already includes all the add-ons, fees and taxes. If you're planning to put $2,000 down, your loan amount is $13,000. Now, let's say you qualify for a 3.49% interest rate and you have the choice between 48, 60 or 72 months for your repayment term. Here's how your monthly payment would differ depending the length of your loan term:
- 48 months: $291
- 60 months: $236
- 72 months: $200
With this information, you'll have a good idea of whether you can afford that particular vehicle, and how the monthly payment would affect your budget. Keep in mind, though, that while a longer term will give you a lower monthly payment, you'll end up spending more on interest charges, which will make the vehicle more expensive overall.
When it comes to actually getting a car loan, many dealerships can help you do this through dealer-arranged financing. But it's also a good idea to do your own research and get prequalified with at least a few lenders so you can compare rates, fees and other terms.
Know Where Your Credit Stands
If you're planning to borrow money to finance your new vehicle, it's crucial that you take the time beforehand to understand your credit and, if necessary, take steps to improve it. Each lender is different and there's no universal minimum credit score for car loans, but a higher score will generally make it easier to score a low interest rate on your new loan.
Start by checking your credit score to see where you stand. A FICO® Score☉ of 670 or higher is considered good, and scores in the upper 700s or higher will give you an even better shot at a low interest rate.
If your score needs some work, check your credit report to find out which areas you can address. For example, you may have some past-due payments you need to get caught up on, or you might need to pay down some of your credit card balances to reduce your credit utilization rate.
While you're looking for ways to improve, also check your credit report for information that's inaccurate. You can dispute incorrect or fraudulent information, which may be removed or revised depending on the outcome of the dispute.
Other ways to improve your credit history include:
- Continuing to make all payments on time, and keeping your credit card balances as low as possible
- Keeping old credit card accounts open and active
- If a family member has a credit card with a positive payment history, asking them to add you as an authorized user could help
- Avoiding applications for new credit unless it's necessary
- Using Experian Boost®ø to get credit for utility and phone payments
Building your credit score can take time, but even a modest improvement can result in a lot of savings. If you don't have time to improve your credit before you apply for a car loan, keep in mind that you can refinance the loan later after you've had a chance to increase your credit score.
Best Times to Buy a Car
Making sure your budget and credit are in order are essential steps in buying a new car. But once you're in good financial shape, your timing can make a difference in terms of the deal you get.
The End of the Month
Car dealerships typically set monthly quotas for their salespeople. This means that if you do your car shopping during the last few days of the month, you may have a better chance of working with a salesperson who's motivated to offer deals to meet their goal.
The same goes for the end of each financial quarter, so the end of March, June, September and December can give you even more opportunities.
Dealerships might be busy on the weekend because most people aren't working, so salespeople generally have an easier time finding buyers. This often means you're less likely to be offered a deal by staff looking to boost their sales numbers.
If you can go during the week, you may be able to eke out some savings when demand isn't as high.
Dealerships regularly offer promotional discounts on holiday weekends, especially on their lineups of brand-new vehicles. You can usually find good deals around Memorial Day, the Fourth of July, Labor Day, Black Friday and New Year's.
Holiday promotions are especially nice because you can compare discounts offered from multiple dealers in your area and use them to negotiate better prices.
New Model Years
Due to limited dealership space, new models coming in means last year's model has to go. So if you've had your eye on a 2020 model vehicle, for instance, waiting until the 2021 model hits the lot can save you money.
Many car manufacturers release their latest models in the summer months or early fall, but there's no universal time of year to look forward to. You'll have to keep an eye on auto news or ask your local dealership to send you updates when new models will be ready.
Additional Car-Buying Tips
While the right timing can help you save money on a car purchase, it's not the only thing to keep in mind. To find the right fit and save, try to do the following:
- Define your budget early. Know how much you're willing to spend on a vehicle before you ever step foot on a dealership. Salespeople often try to frame the cost as a monthly payment, which they can manipulate with longer repayment terms. But if you're firm about your budget from the get-go and understand the terms of the sale, you can avoid overspending.
- Do your research. If you're in the market for a specific model, research prices at several dealerships in your area. Also, look up the value of the vehicle using Kelley Blue Book or NADAguides. This information can give you more negotiating power with a salesperson.
- Save up for a down payment. You don't have to have a huge down payment for an auto loan, and some lenders even offer 100% financing. But the more money you put down on the purchase, the less you'll have to borrow. A larger down payment can also help you score a lower interest rate.
- Consider buying used. Brand-new cars are appealing for many reasons, but you'll generally save a lot of money buying used, even if the car in question is only a few years old. The value of a new car drops quickly once it's driven off the lot, and letting someone else take that hit can mean big savings for you.
- Read the contract. Vehicle purchase contracts are long and full of fine print, so it's important to know what you're getting yourself into before you sign. Specifically, look at the fees the dealer is charging and ensure there are no add-ons that you didn't agree to. Also, check for late fees and prepayment penalties if you choose to pay off the loan early.
With this and other tips for car buyers in mind, it's more likely you'll have a good car-buying experience.
Continue to Monitor Your Credit
While it's important to know where your credit history stands before buying a car, it's crucial to continue building and maintaining a good credit score afterward. Experian's credit monitoring service can help by providing you with free access to your FICO® Score powered by Experian data.
You'll also get insights into your spending habits and customized alerts about new inquiries and accounts added to your Experian credit report.