Is it the best time to buy a car? Should you wait a few months or years? Here are 5 factors every potential buyer needs to consider.
Just when is the best time to buy a car?
If you’re asking this question, it’s clear you need a car. What’s not clear is whether you’re ready to make the purchase.
Buying a car, for most people, is a big financial investment. With the average price of a light car hovering above $38,000, you want to make sure you aren’t getting into a costly financial mistake.
There’s no fixed or standard time that’s best for buying a car. The best time for me isn’t necessarily the best time for you.
In this article, we’re sharing a couple of factors you need to consider when you’re trying to figure out the best time to hit the dealerships.
Buckle up!
1. You’ve Met the Minimum Age for Driving a Car
On May 5, 2020, a 5-year boy hit the news when he was stopped by Highway Patrol.
Reason?
He was driving to California to buy a Lamborghini.
In this story lies an obvious lesson for all prospective car buyers. Even if you’ve got the money to buy a car in cash, the law can prevent you from driving one if you haven’t met the minimum age for being a driver.
Of course, you might not need to worry about age if you will be chauffeured around. But if you’re anything like most Americans, you’re buying a car so that you can drive yourself to work, school, and anywhere else you’ll be commuting to.
In the United States, the legal age for driving without supervision is 18, and 16 with supervision.
While on this, do you have a driving license already? If you don’t, it’s advisable to acquire one before you start shopping for a car. You don’t want to have a car you can’t drive in your garage or driveway.
2. You’ve Got the Money to Buy a Car
Cars don’t come cheap. Even if you’re considering buying a used car, a decent purchase will take you back about $20,000.
Do you have this money lying around in your bank account?
Even if you do, it doesn’t necessarily mean you’re in a position to buy a car in cash. In addition to the cash price, there are other expenses that will drive up the cost. For instance, you’ll need to purchase auto insurance and pay for gas, repairs, and routine maintenance.
If you’ve been saving for this purchase and you’ve got a steady income, it’s possible that you might be financially ready to buy a car right now. You might still want to consult a personal finance advisor for a more detailed assessment.
Here’s the thing, though. The vast majority of car buyers don’t buy in cash. They take out auto loans.
If you’re eyeing a loan too, the next point is a critical consideration.
3. Your Credit
107 million Americans — a record high — have an auto loan.
It might look like lenders are dishing out auto loans to every person looking for one, but that’s far from the truth. To qualify for an auto loan, your credit score must meet the lender’s requirements.
In 2019, you needed a credit score of 715 to get a loan for a new car. For a used car, 662 was the magic number.
How is your credit score?
If it’s above 660 and you’ve got a steady income, you’re a step close to qualifying for an auto loan at a good interest rate.
But what if your credit score is below this?
If it is, right now might not be the best time for you to buy a car. This isn’t to say you can’t get an auto loan. You can still get a car loan with bad credit, especially if your income is solid, but you’ll incur a high-interest rate. Considering the high cost of cars, the last thing you want is to carry an expensive loan.
4. Your Job Security
We’ve been talking about a steady income. How steady is yours?
Every lender is going to evaluate your bank statements, employment contracts, and other relevant documents to determine the risk involved in making the loan to you.
If you’re employed, you must consider your job security.
In light of the COVID-19 pandemic, it’s easy to see why lenders will give more attention to your job security. If you’re likely to lose it – maybe your employer’s business has been affected by the pandemic – perhaps you shouldn’t be looking into buying a car right now.
Even if you’re buying in cash, losing a job soon after spending a lot of money on acquiring a car can leave you in financial ruin.
If you’re an entrepreneur, how steady is your business? Most businesses have suffered greatly due to COVID-19 closures, but others are thriving.
In general, you want to buy a car when you’re certain that your primary source of income is secure.
5. Market Conditions
Who doesn’t love a steal?
Car prices aren’t cast in stone. The price of the car you want to buy will keep fluctuating (mostly downwards), depending on a number of factors.
The state of the economy, for example, has a big impact on car prices. If the economy is doing well, car prices tend to be higher. And when it’s on a slump, car prices tend to fall.
Right now, in particular, is the best time to buy a car if you’re financially ready. Used car prices are plummeting due to the COVID-19 pandemic.
Dealerships are offering crazy discounts in a bid to maintain sales. Don’t believe us? Take a look at this dealership’s inventory.
When Is the Best Time to Buy a Car? It Depends!
The best time to buy a car depends on a number of variables. There’s your personal financial situation, your job security, as well as the state of the economy and the car market. Generally, though, you want to buy a car when you stand a good chance of getting an irresistible deal.
Keep reading our blog for more helpful tips and advice.
Facebook Comments