The Best Time to Buy a Car

by Kevin on April 8, 2009

(Photo by The Pug Father)

Did you know now is the best time to buy a new car for your growing family?

Did you know that interest rates have never been lower, so it’s a great time to buy a vehicle?

Did you know that if you buy a car from us and lose your job in the next year we will take the car back, no questions asked?

Now is the Best Time to Buy a Car

There are a lot of advertisements and articles out there saying that this year is the best year in a long time to buy a car. The economy is in shambles, unemployment is rising, car manufacturers are desperate (after being bailed out a couple of times), and home values are falling.

All this adds up to fantastic deals in the marketplace for those who are in the market for a vehicle. Dealers are slashing prices to get suddenly unwanted SUVs off of the lot to make room for hybrids. Dealers that used to sell 100 cars per month are scraping by on 25 or 50 per month. The buyer with negotiation skills can walk out with a pretty handsome deal if they play their cards correctly.

Now is NOT the Best Time to Buy a Car

The reason all of these deals are appearing is due to the economy. This makes it potentially a terrible time for you to buy a car — what if you lose your job as well? Unless you buy one of those cars with the “assurance” program where they buy your vehicle you may be up a creek without a paddle.

Pros and Cons of Buying a New Car

There are positives and negatives to buying a new vehicle. Positives: mostly worry-free maintenance for the first three years, much smaller chance of serious problems that you will pay for out of pocket, and other things associated with having a brand new vehicle. Plus you get to show up your friends with the new vehicle.

The negatives include the usual depreciation hit you take on the car (you instantly lose 20-25% of the value of the car the moment you drive off the lot) and increased insurance costs. And they cost more than a used car.

The Best Time to Buy a Car…

The best time to buy a car is when you NEED A CAR. Yes, prices are relatively low right now. Dealers are desperate to make a sale. They are willing to throw in all kinds of perks to get you to come down to the lot.

But the cost of a new car is much higher than of a similar used car. Remember that depreciation hit you take when you drive off of a lot? Go buy a used car and you get to appreciate that savings.

If you don’t need a car then now is not the best time for you to buy. If you need a car, then it is a good time to consider it — but remember the used car option. The costs can be significantly lower with a used car.

{ 6 comments }

Philip April 8, 2009 at 9:33 am

Oops, I must have fallen for all the advertisements.

My vehicle had major mechanical issues that would cost more to fix than it would cost to buy the same one used like it is. I decided to purchase a new vehicle after looking around and checking the price for used. If it had less that 15k miles on it then the difference between used and new was less than $2000 and your financing rates were higher.

I think I got a pretty good deal on it and will have it for a long time.

There is a chance that I was just a sucker and could be the poor choice of what to do, only time will tell I guess.

Mike @ TheThriftyLife April 8, 2009 at 10:25 am

I’ll be posting a full post on this topic, but we just purchased a new car and in my opinion got a fantastic deal that we couldn’t pass up. If you need a car – now is the time to buy.

Would you buy a new car for 50% off? Including a 10 year/100,000 mile, full-service warranty, including three years of free maintenance? That’s exactly what we did and I couldn’t be happier.

Baker @ Man Vs. Debt April 8, 2009 at 11:14 am

I’m sorry… No matter how you try to justify it, I just can’t see any financial logic in a new car purchase.

My opinion is that in order to buy a new car you just have to step up and say I’m spending more because I want to have a feeling that a new car gives me.

There is nothing wrong with this. We all spend money on this that make us feel good. For some thats the mark-up of a new car, for others its different.

No matter how many times you run the numbers, the math just doesn’t work out!

tom April 8, 2009 at 11:17 am

You are absolutely right, people don’t seem to see there are two sides to everything.

Just because cars are super cheap, does not mean you can afford it and afford to keep it.

But in the end that is the beauty between in control of your finances and life versus listening to sales pitches and bad advice.

Kevin April 8, 2009 at 12:54 pm

@Philip: As with everything “it depends”. Unfortunately if I wrote an article that tied in all of the “it depends” I would have a novel on my hands 🙂

In that situation where it is $1-2k difference I think it would come down to associated costs like insurance and how much older the used car would be.

For example if a 2008 was $1k less than a 2009, I’m getting the 2009 because of the extra year of warranty and service.

@Mike: It depends on how much that 50% off is. Could you get a used car that worked just as well for a similar price? You’ve got to factor in how much those perks are going to cost you in the long run. I’m not saying it is necessarily a bad thing to buy a new car, but there are some calculations you need to run first.

Now if the new car is 50% off and that price is cheaper than a comparable used car… then obviously go with it.

@Baker: I think a LOT of people buy new cars for this. Just like any other spending problem it is the “I deserve this” mentality. I’m NOT saying this is the case with Phillip and Mike from above, just a general comment about American society.

@tom: We’re always stuck in the middle of those two things. Someone is always pulling on that wallet of ours.

tom April 8, 2009 at 1:42 pm

That is so true, someone is always nit picking at our wallet. But in the end you gotta fight the battle, sooner or later you will win it.

@Baker
You bring up an excellent point and something I have started to wonder about.
I mean buying a car on a loan should never be done unless you have recuring income each month that can cover the interest and principal.
Even then, you may be sacrificing other more important goals such as investing, saving or retirement.

I mean even if you buy say a used car, you should be in it to drive it until it literally stops on the road and it doesn’t make sense to fix it.

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