In a recent post, we shared some industry insights into timing the car-buying process and busted common car shopping myths you may believe. If you’re trying to find the best time to buy a car, you’ve probably heard that the end of the year is a great window of opportunity to cash in on some perks. While there are certainly some advantages of buying a car at the end of the year, there are also drawbacks you’ll want to understand as well. Read on to learn more about what you should know when buying a car at the end of the year.
Advantages of Buying a Car at the End of the Year
Buying a car at the end of the year has a number of great advantages. For example, it means you’ll have an opportunity to grab readily available discounts on the previous year’s models. Car manufacturers have a different calendar than the rest of us, so new models are rolled out, quite literally, in the fall as opposed to the first of the year. Because there is usually more interest in getting the newest model available, dealerships slap discounts on “last year’s” selection throughout November and December.
The flip side of this year-end perk is also true: With the model year coming to a close, the latest and greatest is available in the next year’s model. New model vehicles may have updated features, functionality, or design that sparks your fancy—all of which may be missing from the previous year’s option. Buying a car with the newest features helps a great deal in maintaining the long-term resale value of your new car as well.
For business owners, buying a vehicle at the end of the year has added benefits. As long as the vehicle will be used at least 50% of the time for business purposes, a new car, truck, or SUV bought at the end of the year comes with some significant tax breaks. In addition to a deduction for the purchase itself, business owners may also take a first-year bonus depreciation deduction, but only for new vehicles. These tax breaks are limited and based on the size of the vehicle and amount of money the business earns in the year—but buying a new car at the end of the year can have a significant impact on a business owner’s tax expenses.
Drawbacks to Buying a Car at the End of the Year
While purchasing your new car at the end of the year has its benefits, there are a few drawbacks, too. As mentioned above, getting a discount on the previous year’s model means the car isn’t as new—so you may miss out on redesigns or enhanced features. Because the vehicle isn’t as new as next year’s models, it also has less resale value.
Similarly, waiting until the end of the year to buy a car may impact the trade-in value of your current vehicle. Based on the dealership’s calendar, your car is now technically one year older, and because vehicle values depreciate over time, you may be setting yourself up for a smaller credit toward your new vehicle purchase. It’s also important to know that the end of the year means a smaller inventory selection of last year’s models and, in some cases, none whatsoever. If you have your heart set on a specific vehicle from the last year, be prepared to search out dealerships to find what you want before heading out to buy your new car.
For most buyers, waiting until the end of the year to purchase a car comes with a similar number of advantages and disadvantages. As long as you know what you’re willing and able to pay for your new vehicle, how last year’s and next year’s models differ, and how these choices impact your vehicle’s resale value, buying at the end of the year can be a smart move.
Should You Buy a Car at the End of the Year?
The right time to buy a car is when you have found the vehicle you love from a dealership you trust at a cost that you are comfortable with. If the timing works out for you to buy a car at the end of the year, then great! Use the current incentives and selection to your advantage. However, if you aren’t yet ready to buy a car at the end of the year, it’s wiser to wait—most people are happier spending a little more for exactly what they want. While buying a car at the end of the year has its advantages, the important thing is that you drive away from the dealership in a car you love at a price you can afford—and only you know when the timing is just right for that to happen.