The TV ads are fast and furious offering an array of discounts on end-of-year new car models and you are wondering if you should explore your options.
It is that busy time when dealerships and carmakers are hoping to make room for the new model year vehicles. Again, you ask should you buy now.
For example, such big rebates and 0 percent financing offers definitely can tempt shoppers to make a fast deal for a new car. However, this season is iffy since used car prices are unusually high thanks to Mother Nature i.e. hurricanes that wiped out an estimated 1 million vehicles and there are tons of new cars sitting on the lots.
“Given that an optimistic auto industry has led to a slight oversupply of cars, some buyers might find not much of a difference in the price when they compare a 3-year-old, off-lease certified pre-owned vehicle and a discounted brand new vehicle,” said Mel Yu, Consumer Reports automotive analyst in a recent article reported by the agency.
As we move into the remaining months of 2017, the marked-down new cars are in the last days of their model year. The great savings may seem second to none, but these cars are technically already a year old when 2018 models make their way to showrooms.
Rebates and added urgency can mean real savings off of the sticker prices, but bear in mind, every new car depreciates about 10 percent when it’s driven off the lot. And a car purchased at the end of the model year could see its depreciation hit the average of 19 percent for a 1-year-old vehicle, CR’s Yu adds.
There is no doubt that the latest offers and deep discounts on many models — are worth a look and maybe even whipping out our checkbooks for. The most dramatic savings tend to be on models in their last year before a redesign. Most models tend to have highest reliability in their last production year, so it might be a good idea to buy, especially if it offers the latest safety features. However, the depreciation hit may be considerable once a newer model hits the streets, experts suggest.
Typically, autumn tends to have the highest prices — when new cars are just arriving and the usual price increases that come with new models have been applied to carry-over models.
But if past trends are true, prices climb a few hundred dollars between summer and winter. This means, on average, any savings from buying in the summer is negated by depreciation and only nominal price increases for the newer model.
Also, if you are looking to lease, note that some banks won’t lease leftover cars after the model year changes.
It is also important to remember when there are big incentives; you’ll need to decide fast, as the best inventory will be gone in the blink of an eye leaving not so popular colors, options, or trims as leftovers.
Additionally, while checking out the many amazing deals, you might discover low-mileage “program cars” that were used as a demo vehicle or as executive cars. These usually have low mileage and low wear-and tear on them. While this is true, remember these warranties start when you buy.
Generally, the model-year-end deals make sense only if you plan to hold on to a car for a long time or if you are a high-mileage driver (driving more than 15,000 miles a year) and looking to change vehicles every 3-5 years. For those who are the opposite, and drive a lot, and rack up big annual miles, a close-out car would give you one more year to spread those miles out, and help preserve its trade-in value.
The exceptions may be those models for which there is excess local supply, enabling deep discounts on a solid model.
Getting a great deal starts with shoppers identifying the best car for them, and then getting that car for a fair price. When car shopping, do not just hone in on the advertised deals. Remember, there is still the possibility to negotiate, as dealerships, automakers and sales managers are ready to make a deal to rid them of end-of-year model cars.