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Red Light, Green Light: When to Buy a Car and When to Hit the Brakes

Red Light, Green Light: When to Buy a Car and When to Hit the Brakes

| December 06, 2021

According to Edmunds, the average transaction price for a new vehicle rose by 8.6 percent from June 2020 to June 2021, while the price for a used vehicle has risen by 27 percent over the same period.

However, this doesn't mean there aren't still deals to be had, especially if you time your purchase correctly. Read on to learn more about good times of the month—and the better months of the year—to buy your next vehicle.

Good Time of the Month to Buy

Many dealerships pay their salespeople through commission, and some require each salesperson to sell a certain number of vehicles to get the higher commission tiers. This may mean there's quite a bit of incentive to sell more vehicles at the end of the month if this sales goal hasn't yet been met. However, if the sales team met their goal that month, there may not be as much incentive to close the deal. There's no guarantee that you may get a good price simply because you're buying on the 30th instead of the 1st.

Good Time of the Year to Buy

Generally, the end of the calendar year is when you may find a good vehicle deals. The reason for this is twofold:

First, dealerships need to get the current year's inventory off their lot to make room for the next year's inventory. "Older" new vehicles are tougher to sell than the current model year, even if they're otherwise identical. Second, dealerships that report their sales by the year have a vested interest in bumping this number as high as possible.

As a result, December tends to be the cheapest month of the year to buy a new vehicle, followed by November, October, and September. This is typical, but not always. The most expensive times to buy a new car are January through April. You may not always have the ability to wait a few months (or even until the end of the month) if you need a new vehicle right away, if your timeline is more flexible, waiting until month-end and year-end may provide you with some hefty discounts off the manufacturer's suggested retail price (MSRP).

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

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