ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

When is the best time to buy a New Car?

Updated on December 3, 2014

When buying a new car, timing is ALMOST everything...

After leaving the military I worked for some time in the auto sales industry, selling both new and used vehicles. I started out as a sales person and worked my way up to Finance Manager and I can assure you there are some very important things you must know before you go to buy your new car.

Allow me to further reiterate that this guide is only a reference for new car purchases or leases, negotiating a good used car deal is a little different. I should also point out that every dealership is somewhat different, some are more desperate for your business than others. However, there are certain truths throughout the industry.

Timing

The best time of the month to buy a used car is always at the end of the month. Ideally, on the last day of the month. Why? Because each new car dealership has a quota for sales it is expected to meet by the manufacturer. In addition to the quota, there are milestone bonuses they can earn for selling beyond their quota. For example, a given Nissan dealership might be expected to sell 100 cars per month, if they hit 110 cars they will be given a $100 per car bonus for all the new cars they sold that month, if they sell 125 new cars they will get an additional $200 bonus per car they sold that month (now a $300 bonus), so on and so forth. These bonuses can stack-up pretty quickly. Sometimes a manufacturer may have additional incentives on a particular model (e.g.: $200 bonus on every Nissan Maxima sold). So what does this mean to you?

On the last day of the month, the dealership is highly motivated to move as many additional units as possible, not only to get to the next reward level, but also to pad the number of cars on which it will receive bonus payments. So they are very willing to sell cars at a loss!

Sold at a loss? That can't be true!

Customers never believe that a dealership would sell vehicles at a loss. They assume it's bad business and that the dealership would go out of business if they did it. But the fact of the matter is, new cars are often a loss leader. The profit margins on new cars are incredibly small, so once a dealership gives discounts beyond the manufacturers discounts, the cars are typically sold at a loss. The money is made in the finance department. The dealership will make the bulk of it's money from securing your auto loan for you, and selling you after-market service products (sometimes called extended warranties). But even if you do not buy a service plan, your new car will come with at least a 3 year 36,000 manufacturers warranty, which means you will bring your car back to the dealership for repairs during that period. And although those repairs are free to you, the manufacturer actually pays the dealership for that work. The service department is where the real money is made.

So if your sales person tells you that you are getting a great deal, and that the dealership is actually losing money on this car... it very well may be true, especially if you are buying at the end of the month.

Think about it this way... If you are the 125th sale for the month, the sale that will qualify the dealership for a $300 per car bonus for the month ($300 x 125 cars = $37,500) do you think the sales manager would be willing to take a $2,000 loss on your deal and throw in three years worth of free oil changes? Absolutely he would!

How do you know if you are getting a great deal?

So how do you know if you are getting a good or a great deal? First of all, do your research before you go to the car dealership. Despite the poor reputation car sales has historically received, it is now one of the most open and transparent financial transactions you will conduct. All the information you need is available for free on the internet. You can find the Manufacturers Suggested Retail Price (MSRP) for the vehicle you are interested in and you can find the invoice price (the price the dealership pays). The difference between the two is the potential profit for the dealership, it's also the amount of negotiating room they typically have. You can also find the prevailing interest rates for auto loans in your area, the tax rates and even the doc fees. All the information is available online so you should know what to expect when you go to the dealership.

There are two good rules of thumb. 1) If you are happy with your deal, then it is a good deal. Don't lose sleep over whether or not you are paying more than your neighbor. People always ask what the fair price for the car is. The fair price is the MSRP, which few people actually pay. 2) If the sales manager is willing to let you leave the dealership, then you are walking away from a great deal.

That second one is huge. The cardinal rule in car sales is that no one leaves without buying a car, unless the sales manager lets them go. Sales people get in big trouble for letting customers walk. If you say you want to go and the sales manager says "Okay, thanks for coming in..." and lets you leave without trying to sweeten the offer a little more to get you to stay, that means he has already put all of his cards (and probably a little more) on the table. It means he has given all he has to give, and you are probably walking out on the best deal you will get. Yes you can go to another dealership, but the odds are, they won't match the same deal.

At the end of the day, you should go with your gut. If the deal feels right, and the staff at the dealership has treated you fairly and with respect, then they should earn your business. If it doesn't feel right, or you feel pressured, go elsewhere.


Poll

How do you feel about new car negotiations?

See results

© 2014 Anthony

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)