Q: When is the Best Time to Buy a Car?

FACT: There is no single best time to buy a car that works for every car buyer.

Bottom Line: There are certain periods where you have a better chance at getting a good deal. However, there is no golden rule for every single car buyer. In addition, there are also pitfalls to buying during certain time periods.

Here’s why:

END OF MONTH DEALER CLEARNCE: Rumor has it that you should wait until the end of the month. The reason is that car dealers/salesmen need to make sales goals. They cut prices at the end of the month to meet those sales goals.

The truth is many people believe this is true. Therefore, more people run to the dealership at this time. Since there are more people at this time, the demand for cars increase. When demand is higher than supply, you get higher prices. Waiting until the end of the month may not yield the best price, but may increase prices. Studies on car buying during the end of the month show there is no significant difference.

OVERSTOCK: Rumor has it that you should wait just before the new models arrive. The reason is that car dealers need to make make room new arrivals. In order to make room, they cut prices for new arrivals.

This is a half truth. Car prices are set by supply and demand. If the projected demand is high enough, the dealer will not discount prices even if they have hundreds of a specific car model on the lot. This is because car dealers know they are going to sell these cars regardless of the current inventory status. Overstock sales are typically reserved for Labor Day, right before next year models arrive.

LABOR DAY DEALS: Many people say Labor Day is the single best day to purchase a new car. The reason is that car dealers know people have a free day to spend at the car dealership. Also, Labor Day is just before next the arrival of next year’s car models. So, dealers want to unload their surplus inventory.

This is a half truth. For the majority of cars, dealers offer better incentives during Labor Day.

However, you should remember that cars purchased during Labor Day are essentially a year old. This means your car has already depreciated a year before you drive it off the lot. New cars purchased around Labor Day — will lose more value the second you drive it off the lot — than if you purchased the car the week the model came out. This is because the value of the car depreciates faster than the average car dealer lowers prices. (Taking the hit on a year-long depreciation cost surpasses even the most generous Labor Day deal).

If you plan on keeping your car for more than six or more years, you should buy during Labor Day. Otherwise, it makes sense to buy when the new model first appears in the showrooms.

DECEMBER DEALS: Some people say December is the best time to buy a car because dealers want to unload inventory to avoid taxes carried over to the new year. This is false. In fact, car purchasing data suggests the average car price is $400.00 more during December than September. Do not buy a car in December because you think you will get the best deal.