With 2018 model cars already on the lot, dealers and automakers are offering discounts and incentives to clear out 2017 models before the new year starts. This makes it a buyer’s market — as long as shoppers are flexible and act fast.
‘Balancing act’ for buyers
Finding what you want will be a “balancing act,” says Karl Brauer, executive publisher at car sites Kelley Blue Book and Autotrader. The longer you wait, the fewer the choices you’ll find. “If you wait to buy until Dec. 31, only the dregs will be left,” he says.
Furthermore, not all types of vehicles will be discounted evenly. Most trucks and SUVs remain strong sellers and hold their price, while sedans seem to be falling out of fashion, driving prices down, according to Thomas King, senior vice president of data and analytics at J.D. Power
But surprisingly, consumers who favor leasing will probably find the best prices on 2018 models, King says. That’s because new models have higher residual values — the car’s value at the end of the lease — which means you actually pay less over the life of the lease. For example, one 2017 mid-size domestic sedan was recently offered at $327 a month compared to $199 a month for the new 2018 model, according to Swapalease.com, which matches leaseholders to consumers who want to take over a lease.
Cars.com scoured the market for bargains and listed its top picks for the best new-car deals in December. But understanding the current factors influencing the market, such as inventory levels, can help car shoppers know where to find their own best deal, says Cars.com executive editor Joe Wiesenfelder.
Early in the fall, car lots were choked with unsold 2017 models. Some of that surplus was absorbed after the recent hurricane season forced many car shoppers to replace their flooded vehicles.
But inventory levels are still higher than last year at this time, Wiesenfelder says. Now, automakers and dealers want to get rid of the remaining 2017s, he says. “And the later it gets, the less attractive they will be in the eyes of the consumers.”
All of this points to big potential savings for year-end buyers, mainly on outgoing models.
Tips for bargain hunters
Although year-end discounts make buying a car cheaper, the vehicle will depreciate more quickly because it quickly becomes a year older. However, if you’re planning to keep the car for a long time, the accelerated depreciation won’t be a factor.
Here’s how to get the best deal possible:
- Build a target list of cars. For someone shopping for the lowest price, Brauer recommends locating several different cars and monitoring them regularly to see if they’ve sold. As the new year approaches, if they’re still on the lot, the dealer will probably take a much lower price.
- Consider redesigned models. Two strong sellers, the Toyota Camry and the Honda Accord, were redesigned for 2018, so the 2017 models will be discounted, Wiesenfelder says. Generally, following a redesign, the previous year’s model is perceived by some as less desirable because it lacks some newer features. For those who don’t need the newest bells and whistles, this creates a nice opportunity. Again, the balancing act.
- Contact multiple dealerships. If multiple dealerships near you sell the same brand, contact each for a price quote. There’s a great deal of variability among different areas and among competing dealerships, Wiesenfelder says.
- Choose incentives wisely. Whether you should take a cash refund or low-interest financing depends on the vehicle, how long you plan to own it and your credit score, King says. Use an auto loan calculator to run the math both ways — by reducing the purchase price with a cash refund, or by financing at low- or no-interest — to see which saves you the most.
- Get preapproved. For shoppers with less than perfect credit, it’s best to get pre-approved for a loan before going to the lot. This simplifies the negotiation and establishes a ceiling for your interest rate. In the finance office, the dealer will try to beat the interest rate of your pre-approved loan to get your business.
- Be ready to negotiate. Checking pricing guides, such as Kelley Blue Book and Edmunds, is the first step of a smart negotiating strategy. But this time of year, prices become highly variable and unpredictable as dealers scramble to meet month-end and year-end quotas. Waiting until New Year’s Eve is a gamble, but you might save a lot money.
- Compare model years if you’re leasing. For December shoppers, Swapalease.com recommends asking the dealer for a side-by-side price comparison of a new 2018 model lease versus a 2017 model lease. Generally the 2018 model should have a lower payment.
When you’re ready to buy, use NerdWallet’s car-buying cheat sheet to steer you to a good deal.