5 Year-End Car Buying Tips

The calendar may not show that the year is nearing an end, but for automakers the model year transition is now taking place. This means that the car buying consumer should consider how best to take advantage of current market conditions when shopping for a car. To that end, the following five tips can help you get the car you want and save you hundreds, perhaps thousands of dollars on your purchase:

1. Know your trade-in’s value – New car shoppers will sometimes sell their old car to a private party, but most people trade their vehicles in, using those funds as a down payment for their new car. Used car prices have surged in recent years, but you may not know that the six-year old compact car you own is still worth at least $10,000. For example, KBB.com states that a 2005 Toyota Corolla LE in good condition with an automatic transmission and 60,000 miles on the odometer can fetch $9,025 on trade-in. [1] Moreover, if sold to a private party it is valued at $10,765. You need to know what your current car is worth before you negotiate the purchase of your new car.

2. Model end specials – Some of the biggest discounts available are for cars that have been discontinued and for those going through a generational change. For example, three GM cars are no longer made and, if still available, can yield significant savings for the buyer. The Buick Lucerne, Cadillac DTS and Cadillac STS were discontinued with the 2011 model year. The DTS, for example, offers a $7,000 discount. [2] If you can handle buying a discontinued model, then you’ll save big. Otherwise, consider buying an outgoing generational model such as the 2011 Toyota Camry. For 2012, the Camry gains fresh sheet metal and new interior.

3. Search online – The days of dealing with one dealer are over for many consumers. The Internet has made it easier to shop and save, enabling consumers to compare prices between several dealers. You can negotiate and finalize your purchase price right online, choosing the car you want and signing your purchase papers as soon as you get to the showroom. Tip: Test drive the vehicle you want before making your purchase – you don’t want to be stuck with a vehicle you really did not want.

4. Arrange your financing – Some of the lowest interest rates on new car loans are offered by dealers who use the automaker’s financing arm to get you into a new car. If zero percent financing is being offered to you, then you won’t be able to beat this rate on your own. However, if it comes down to low-rate financing and a generous rebate, such as for $2,000 or more, then shop for a loan with your bank or credit union. If you have excellent credit, a loan rate of 4 to 5 percent is possible. Secure financing on your own and tell the dealer you’ll apply the rebate to your down payment. Use an auto calculator to determine how much you can save. [3]

5. Consider other options – Buying a new car may be what you want, but leasing could be the best choice for you especially if you expect your transportation needs to change two or three years out. If buying a new car is definitely out of your reach, consider purchasing a late model used car from CarMax.com or a reputable used car dealer. You might also be able to assume a lease through a company such as LeaseTrader.com.

The new car market remains depressed which means that car dealers are battling for your business. Be thorough with your research, weigh your options and be prepared to negotiate the best money saving deal that you can find. Then, enjoy your new ride!

References

[1] Kelley Blue Book; 2005 Toyota Corolla SE; September 3, 2011

[2] Cadillac: 2011 Cadillac DTS Standard

[3] Bankrate.com: Auto Loan Calculator

Further Reading

What Every First Time Car Buyer Should Know

5 Smart Car Buying Tips For Consumers