New vehicle inventory has reached a peak of 2.61 million as of February 2, 2024. On average, it will take dealerships 80 days to sell their current supply of cars. This gives consumers a lot more leverage when it comes to negotiating new car prices.
So, should you buy a car this spring? Or is it better to wait until summer or even the end-of-the-year sales?
When is The Best Time to Buy a New Car in 2024
In general, the best time to buy a new car is during the last week of the year. In 2024, that would be from December 26 – 31. The reason why the last week of December is the best time to buy a new car is due to the huge increase in manufacturer incentives during that time.
These incentives include both customer rebates and dealership rewards for hitting sales objectives. However, it’s also important to consider vehicle inventory when timing your car purchase. For example, new car prices have skyrocketed during the pandemic due to a shortage in vehicle inventory.
In February 2024, however, vehicle inventory was up by 47% compared to the previous year. However, not all dealerships are overstocked. If you’re looking to buy a Toyota, for example, then you might not get much of a discount right now since they only have 36 days’ worth of inventory as of January 2024.
But if you’re looking for a Ram Pickup, then you’re in luck because their 153 days’ worth of inventory puts the auto dealerships at a disadvantage in terms of price negotiations.
When is The Best time to Buy a Used Car in 2024
If you’re looking to purchase a used car in 2024, then the answer is a lot more clear-cut. Hold off on your purchase until the Memorial Day Weekend. The reason why you want to do this is because we’re smack in the middle of tax season.
Like clockwork, used car prices go up during tax season due to the increased buying power of consumers thanks to their tax refunds. This increase in used car prices is more significant for lower-end vehicles. So it’s best to wait until May 25, 2024, before purchasing a used car, especially if you’re planning to purchase a relatively cheap model.
3 Money-Saving Tips When Buying a Car
Even though car prices have been going down recently, the Manufacturer’s Suggested Retail Price (MSRP) of most models is still inflated. In fact, the average price of a new car today is still 30% higher than it was in 2019.
Here are 4 tips that can help you save money when purchasing a car:
1. Ask for the Out-the-Door Price (OTD)
Before starting the negotiation process, you’re going to want to ask for the out-the-door (OTD) price, which is the total price you’re going to have to pay for the vehicle, including all of the fees, taxes, and add-ons.
In most cases, the price that dealers showcase is the MSRP, but when the time comes to pay the bill, they’re going to show you the OTD price, which will be significantly higher than the MSRP. So, it’s best to skip the whole song and dance routine and get straight to the final price.
Better yet, opt out of the expensive add-ons if you can. In a lot of cases, that can save you thousands of dollars. If that’s not possible, you can at least ask for a discount on the OTD price instead of on the MSRP.
2. Be Mindful of Maintenance Costs
Unfortunately, even out-the-door prices can be misleading. This is due to maintenance costs being wildly different from model to model. There are cases in which a specific car model may be cheaper to purchase but is actually more expensive overall if you factor in maintenance costs.
To avoid this, check out this Cost of Car Ownership tool by Edmunds before pulling the trigger on your car purchase.
3. Purchase Used Cars from Private Individuals
Used car lots purchase their stock from private individuals and then resell them at a significant markup. So why not cut the middleman and save a lot of money by going directly to the source?
Of course, this would also mean that you’ll have to do a bit of homework. You’ll also want a trusted mechanic’s help in determining the condition of the car you want to purchase.
Recommended article: 9 Best Ways to Save Money on Car Insurance
The 20-4-10 Rule in Financing a Vehicle
Chances are, you’re going to have to finance your car purchase. If that’s the case, you’ll need to make sure that you’re not overextending yourself financially. Following the 20-4-10 rule is arguably the best way to avoid buying a car that you can’t afford.
20% Downpayment
You’ll want to pay at least 20% upfront. By doing this, you’re more likely to get better terms on your loan.
4-Year Loan
Don’t finance a car for more than four years. Remember that a vehicle is an asset that depreciates in value over time. So, the sooner you pay it off, the better.
10% Monthly Income Payments
Monthly car payments should be less than 10% of your gross monthly income (not including fuel costs). Yes, this will severely limit the types of vehicles you can finance based on your income. But it’s better than tying up most of your income to your car payments. You might not be able to drive your dream car just yet, but you’ll thank yourself in the long run.
Summary
The best time to buy a new car in 2024 is from December 26 – 31. However, the car market is currently crashing due to dealerships being overstocked. So it’s an opportune time to purchase a new car, especially if the model you’re looking for is overstocked.
If you’re looking for a used car, the best time to purchase one is on Memorial Day Weekend (May 25 – 27). Unfortunately, used car prices aren’t affected by the current new vehicle inventory. In fact, it’s the worst time to purchase a used car at the time of writing due to the tax season.
