With the price of new cars steadily increasing amid the coronavirus pandemic, now may be a good time to purchase a used car. New cars cost an average of $38,779 as of October 2020, according to Kelley Blue Book, up about 1.3% from last year. The typical cost of a used car, on the other hand, was $15,874 that month, according to Edmunds. That's a nearly $23,000 difference.
If you want to get a deal on a car, one of the biggest factors is when you buy. And some of the best times of year for used car purchases are coming up soon.
That's according to iSeeCars.com, which analyzed more than 32 million used car sales. Researchers compared specific times of the year, as well as the month and week, to find which periods offered more or fewer deals than average.
The site defined a "deal" as savings of 5% or more, or over $1,100, off the sticker price.
"The months and holidays toward the end of the year are often touted as a great time to find a used car deal, but it's the beginning of the year that provides the most deals," says Karl Brauer, an executive analyst for iSeeCars.com. "Conversely, the summer and early fall months are the least likely to bring used car deals for consumers."
Video by Stephen Parkhurst
1. Martin Luther King Jr. Day
39.2% more deals than average
28.7% more deals than average
22.1% more deals than average
4. New Year's Eve/New Year's Day
20.5% more deals than average
5. Christmas Eve
18.1% more deals than average
While drivers can often find great deals toward Black Friday and the end-of-year holidays, the start of the new year could be a great time to go car shopping, too, Brauer says. "This is likely because a glut of trade-ins don't hit the marketplace until after the holiday season."
1. July Fourth
18.6% fewer deals than average
16.9% fewer deals than average
16.2% fewer deals than average
4. Father's Day
15.5% fewer deals than average
15% fewer deals than average
You might think buying on Memorial Day or Labor Day would net a good deal, but purchase patterns for new vehicles help explain summer's so-so prices. "New car shoppers are likely holding out for the next model year vehicles, which come out in late summer and early fall," Brauer said. "As a result, they aren't trading in their used cars, so inventory is lower than normal."
Video by Jason Armesto
Whether you're buying new or used, it's also important to determine how much you can realistically afford before you head to car dealerships. Try shopping around for different financing options to get a better understanding of what kind of auto loan you could qualify for based on your credit score.
For example, if you have an excellent credit score (above 750) and the most you want to spend is $15,000 with a 20% down payment, Wells Fargo offers a monthly payment of $236 on a 72-month loan, PNC offers $239, and Capital One has $244, according to December 2020 data from WalletHub.
It's important to take the long view, experts say, and treat a used car purchase like any other financial goal, by planning ahead and saving for that purchase and making sure that expense fits with your budget.
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