Right Now Is The BEST Time To Buy Your Next Car
Dear Rich Lifer,
I’ve shared with you before a story about how I saved $2,000 on a new Volvo station wagon.
A lot of readers emailed back asking for other ways to save money buying new or used cars.
As you can imagine, there’s not a lot of car buying happening right now — at least not in dealer showrooms.
RBC Capital estimates that 2020 U.S. car sales will drop 20 percent from last year. J.D. Power is a bit more optimistic with their forecast sitting around 17 percent.
Either way, auto manufacturers and dealerships have their work cut out for them in these coming months.
Which brings me to my next point … with car lots ballooning in inventory, car buyers are in a unique position.
In fact, the coming months might be the best time ever to buy a used car.
Brian Murphy, vice president of research and analytics at Canadian Black Book says, “Prices will probably drop about 15% for cars and about 18% for trucks and SUVs between now and the middle part of the fourth quarter.”
“Before all this happened, used car prices had been going up for the previous 10 years in a pretty steady way,” says Murphy.
“We started to see things slow down in March by 1%, which might not seem like a lot but it’s actually significant. It’s the biggest decrease in pricing we’ve seen across the whole industry since September 2007,” explains Murphy.
Although these forecasts are north of the border, it’s likely the U.S. will see some record-breaking low prices in the used car market as well.
My guess is that by mid to late summer there will be a flood of used cars for sale. Here’s why…
The Lease Effect
Before COVID-19, leased vehicles were a huge source of high-quality inventory in the used car market.
Since most car shoppers buy in springtime, this also happens to be when a lot of leases come due.
But because of the pandemic, lease owners are likely holding onto their vehicles, at least as long as dealerships give them contract extensions during these unusual times.
Once these leases come to an end, probably later in the summer, there’s going to be a flood of used cars, trucks, SUVs, and minivans for sale at wholesale auctions.
When the economy finally reopens and consumer confidence starts to claw its way back, prices should stabilize. But until then, buyers should have a solid window of savings opportunities from now until early fall.
How to Buy a Car in a Pandemic
Okay, so you’re convinced now is a good time to start shopping for a car.
How do you do it safely?
Most dealerships deemed essential businesses may have closed their showroom doors, but are still taking orders over the phone and online.
Don’t worry, it’s not as crazy as it sounds.
Dealerships realize the situation they are in and are quickly adapting to accommodate buyers.
I’ve heard of some dealers even willing to do video conferencing with buyers and give them full virtual tours, walk around inspections and complete most of the paperwork online.
Essentially, you’re buying a used vehicle that has been inspected, comes with a free CARFAX history report, and you have a certain number of days (usually 7) or number of miles before you can return it and receive a full refund if you’re not satisfied.
These online marketplaces will usually deliver the car to your driveway at no extra cost as an added bonus.
Can You Still Negotiate Online or Over the Phone?
Yes, and almost all the same negotiating principles apply.
In fact, sometimes it can be easier negotiating over the phone or through email because it removes a lot of the emotion. One of the ways car dealers will sell you on a vehicle is the test drive.
Before talking about price or financing, they’ll have you sit in the car, sink into the plush leather seats, smell the fresh new car smell, get you hugging the corners to really feel how it handles.
By the time you’re ready to talk numbers, your subconscious mind has already talked yourself into buying a new car.
Needless to say, negotiating over the phone or through email can often result in a better deal.
I’ve talked about car negotiation tactics before so I won’t rehash them here. But I’ll give you a quick summary:
- Know how the other side makes their money
- Get them to say the price first
- Be prepared to walk away, and do it!
- Everything is negotiable
One of the biggest tricks dealers try to pull is they combine the purchase price, your trade-in offer, and your financing into one single negotiation.
How they do this is they’ll ask you a simple question, “what kind of monthly payment can you afford?”
If you tell the salesperson your monthly allowance, you’re giving them carte blanche to charge you whatever price they want, under ridiculous loan terms, with insane APRs, so long as it’s under your monthly payment.
By treating all these as separate negotiations, you’ll end up saving more on the purchase price of the vehicle. Also, you can shop around for financing or choose to sell your car on your own, potentially saving you more money.
Buying a used vehicle during a global pandemic is not business as usual but there could be no better time to buy then now.
To a richer life,