Are year-end car sales good deals?

No

Waiting to purchase a new car at the end of the year when it appears that the Auto Dealers must liquidate their old stock to make room for the new models isn't as good of a deal as the advertising makes it out to be.

Sure there may be HUGE rebates and low finance rates to the consumer but the profit driven Auto Dealer compensates for these consumer savings so he can still make money, and that profit comes from you. The rebates come directly from the manufacturer to the consumer in the form of instant savings off the sale price. During periods where rebates are offered the Dealer has more consumer traffic and therefore is actually less likely to offer additional discounts on top of the manufacturer rebate. The psychology behind this practice is very simple, supply & demand.

Don't get me wrong, end of season rebates do equate to savings for the consumer but it doesn't mean you're getting the best deal possible. The concept behind the advertising is to make you think you are getting a great deal while making it also appear that the Dealer is willing to lose money to make room for new inventory. First of all, the Dealer is never willing to lose money, especially in today's economical climate. Secondly, there really isn't an incentive to the Dealer to liquidate old inventory any more than any other time of the year.

The Dealer isn't out to take advantage of you when the market is so competitive but he will take this opportunity to make profit. Two of the most common ways for the Dealer to make money during this time is on the Sale Price and the Value of your Trade-in. Even when you do your homework and try to be as pragmatic as possible, buying a car is still an emotional and impulsive purchase. After you've test driven your new car and imagined it already parked in your garage you're actually just as eager to purchase it as the Dealer is to sell it to you. It is also a proven fact that consumers negotiate less when there is a high rebate offered on the vehicle they are buying. In addition, the consumer (having already pictured himself driving his new ride) is more willing to part with his trade-in at a lower price.

So when IS the best time to buy? A great time to buy is actually AFTER the first of the year. During the months of January and February the Dealer is still sitting on last year's models and significant rebates are still being offered by the Manufacturer only not as heavily advertised. These months are also typically slower sales months for the Dealer and there are far less consumers willing to buy. Most people have overspent during the holidays, are buckling down on the New Year's Resolution to spend less and/or preparing for the upcoming tax bill. The supply of vehicles to buy is still fairly high but the demand to purchase is extremely low. This is the time where the Dealer is really willing to negotiate.

Here are a few tips when you're in the market to buy a new vehicle:

Do your homework and determine which make & model is most suitable for your needs. Do this online and not by shopping the car lot. Online research will help you focus on the practicality of your choices. Find out what rebates and incentives are available on your vehicles of choice to help you narrow down your options. If you're trading in your old vehicle, use sites such as www.kbb.com to find out what it's worth WHOLESALE, not retail. If you still owe on your vehicle, find out what your principal pay-off is and figure out if you have any potential negative equity. IF YOU HAVE WILLPOWER AND TIME, do some pretend shopping at dealerships that sell the models you don't want. This way you won't be tempted to buy a car you really don't want and you can get a feel for what a Dealer is willing to offer you for your trade-in. Select the Dealerships you would like to do business with. Most Dealers have internet sales departments and initial e-mail contact will go a long way in helping you find the right person to deal with. If you're not paying cash, get your own pre-approved financing from your local bank or credit union. Shop on Tuesday or Wednesday. These are the slowest days of the week for the Dealer which means they will be more likely to negotiate to get numbers on the board. Come to the dealer armed with knowledge. Know the invoice price, package options and incentives available. Once you've selected the right dealer and right make & model, just cut right to the chase on the negotiation process. Simply offer a fair price over dealer invoice, dealers will accept as low as $100 over invoice depending on how popular the vehicle you're purchasing is. Don't forget to ask to see the actual invoice. Negotiate your trade-in, remember the dealer is going to have to put some money in the reconditioning of your old vehicle so he can sell it as close to the retail value as possible so you need to ask yourself if you're willing to accept their offer. In most cases consumers need to trade in the old vehicle if they still owe on it, so this is where it's extremely beneficial to shop dealers simply to get an idea of your trade in value. If you don't owe anything on your vehicle and you have time and patience, you will make more money if you sell it on your own. Even if you sell it after you purchased your new vehicle you can apply the proceeds to the principal loan balance and possibly re-finance the balance to reduce your monthly payment. MOST IMPORTANT, if you don't feel you're getting the best deal or the process just doesn't feel comfortable, don't be afraid to walk out the door. There's no shortage of other Dealers who want your business.

Regardless of when you're in the market to buy a new vehicle, there are always great deals to be had for those who are patient, persistent and realistic. End of year rebates and incentives are great opportunities to save money but read the fine print, more often than not these rebates will remain in effect indefinitely and until the inventory of last year's models are depleted. After the advertising hype of "last chance deals" is over and with the use of the internet you'll still be able to find one of last year's models at a dealership that's eager to get rid of it. Good luck and happy shopping!

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