Between preparing for the holidays and attending social gatherings, December is one of the busiest months of the year for most people. But if you are in need of a new vehicle, you may want to find time in your schedule for auto shopping before the new year begins. This is because December is one of the best times of the year to purchase a new vehicle.
Why is December the Best Month For Auto Shopping?
Every automotive manufacturer and dealership have certain year-end sales goals that they strive to meet. As the end of the year inches closer, they may realize that they need to move quickly in order to meet these goals. This is why you may start to see an influx of car commercials and other forms of advertisements toward the end of the year—manufacturers and dealerships are eager to make more sales.
Sometimes, manufacturers will even offer financial incentives to dealerships that meet certain sales goals. For example, a manufacturer may offer a financial incentive to any dealership that sells a certain number of last year’s models before the end of the year.
Sales employees are often motivated to make more sales at this time of the year, too. Sales employees work on commission, which means the more they sell, the more money they take home. Everyone could benefit from earning extra cash around the holidays, so sales employees may work tirelessly to sell as many vehicles as possible leading up to the end of the year.
Everyone from automotive manufacturers and dealerships to sales employees are motivated to maximize sales in December. But how does this benefit consumers? Manufacturers and dealerships generally offer discounts, promotions, and special deals in December to sweeten the deal for consumers. Most automotive manufacturers and dealerships start to advertise these special deals on Black Friday in order to lure customers into the showroom throughout the month of December.
Furthermore, they may be more open to negotiating the terms of the deal because they are so eager to make a sale. This gives you an opportunity to negotiate more favorable terms, including a lower purchase price.
To put it simply, if you want to get the best deal on a vehicle, plan on making a purchase during the month of December.
How Much Can You Save On A Vehicle in December?
The amount of money you will be able to save by auto shopping in December will vary depending on several factors. But it’s estimated that the average discount off the manufacturer’s suggested price is 6% in December, which is the highest average discount by month of the year.
For example, say you are interested in a vehicle with a manufacturer’s suggested price of $20,000. You may be able to negotiate a slight discount of 1-2% in other months, but in December, the dealership may offer you as much as 6% off the price. This would save you $1,200 and bring the price down to $18,800.
According to experts, the savings might be even higher than usual this December. Automotive sales have boomed over the last several years, but sales have slowed in 2020 as a result of the global pandemic. Because of this slowdown in sales, there is a greater number of 2019 models available on dealers’ lots across the country. Dealers must focus on selling these vehicles to make room for the new models, so they are offering bigger discounts to move these vehicles faster.
For instance, consumers saved an average of $4,500 per vehicle in November, which is a record high. Based on this data, experts predict that consumers may save an average of $4,600 per vehicle in December of this year.
What Are the Drawbacks of Auto Shopping in December?
The main benefit of shopping for a vehicle in December is the opportunity to save money. But there are some drawbacks to auto shopping in December, too.
First, you must be flexible when it comes to the type of car you purchase if you want to get the best deal possible in December. This is because manufacturers and dealerships typically only offer deals and discounts on certain makes, models, and years. If you are only interested in purchasing a specific make, model, and year, you may not be able to take advantage of December’s deals and discounts.
This is especially true if you are only interested in purchasing the latest model of a specific type of vehicle. Discounts often apply solely to the sale of older models, so you may not be able to get a good deal on a 2020 or 2021 model.
Even if you are able to find a good deal on the model you like, it’s possible that the discount or promotion will only apply to vehicles without certain add-on features. If having these add-on features are important to you, the lower price may not be worth it.
Some people find auto shopping in December stressful. If you have a lot to get done to prepare for the holidays, you may feel rushed or overwhelmed when shopping for a new vehicle. You may agree to the initial purchase price or decide to skip researching the vehicles on your own in order to save time. But you need to take your time when deciding which vehicle to buy, so it’s never wise to make this purchase decision if you aren’t in the right mindset.
One way to overcome this problem is to take two separate trips to the dealership. During the first trip, focus on gathering as much information as possible about your options. Ask for informational brochures, talk to sales employees, and take test drives of the vehicles you are interested in purchasing. You could also complete this first step in the process of buying a car online if you’re running short on time.
Then, go home and think about your options. Once you decide which vehicle is right for you, return to the dealership to negotiate the terms of the deal.
Breaking down the process of buying a car into two separate trips will make the experience less stressful and easier to manage even in the middle of a busy holiday season.
How Much Does it Cost to Own A Vehicle?
It’s important to determine if you can afford to purchase a vehicle prior to making a purchase. To figure this out, it’s best to calculate how much it will cost not only to purchase a vehicle, but to own a vehicle in general.
According to AAA, the average cost of a new vehicle in 2020 is $31,401. But the average annual cost of owning and operating a vehicle is $9,561, or about $796 per month. This includes the costs associated with fuel, financing, maintenance, repairs, depreciation, and more. The cost of owning and operating a vehicle will vary depending on several factors, including the type of vehicle. If you want to keep costs as low as possible, stick to a small sedan instead of an SUV, truck, or minivan.
Keep these costs in mind when deciding if now is the best time for you to purchase a vehicle.
What Are the Current Interest Rates On Car Loans?
Many people choose to finance an auto purchase as opposed to paying for a car in cash. Fortunately, now is a great time to finance the purchase of a vehicle.
The average interest rate for a vehicle loan has slowly declined month after month. In November of 2018, the average interest rate for a vehicle loan was 6%. But in November of 2020, the average interest rate was 5.5%.
Many consumers are able to secure an auto loan with an interest rate that falls below this national average. In fact, about 25% of auto shoppers who chose to finance their purchase in November of this year were able to obtain a loan with an interest rate below 3%.
The average monthly payment for new vehicles in the third quarter of 2020 was $550. But if this is out of your budget, you may be able to lower your monthly payment by extending the term of the loan. It’s important to discuss these options with the loan representative before finalizing the agreement.
If you plan on taking out an auto loan, make sure you clearly understand the terms of the loan before signing on the dotted line. You should know the interest rate, how much you are expected to pay per month, and the term of the loan at the very least.
When is the Next Best Time to Purchase A Vehicle?
If you aren’t in the financial position to purchase a new vehicle right now, there’s no need to panic. You won’t have to wait until next December to get a good deal on a new car. Manufacturers and dealerships typically offer discounts and special deals on vehicles at several other points throughout the year, mainly the summer.
If you can’t shop for a vehicle in December, the next best time to make a purchase is August. This is when manufacturers and dealerships start preparing for the arrival of the next year’s models. Part of this preparation involves getting rid of older models in their inventory, which means you should be able to find a good deal on one of these vehicles.
There’s no doubt that August and December are the two best months to shop for a new vehicle. But what are the worst times of the year for auto shopping?
You should avoid shopping for a vehicle in January and February. Manufacturers and dealerships don’t usually offer discounts, deals, or promotions during this time period. As a result, you may end up paying more for your vehicle if you purchase it at the start of the new year.