The Best Time to Look for an Auto Loan

Ever wish you could crack the code on when to make your biggest purchases? Whether it’s the best season for homebuying or the ultimate time of year to grab some new furniture or that giant flatscreen TV, timing is everything. So what about when it comes to financing a new vehicle purchase?

Let’s talk through some of the statistical science behind what makes a particular time the best for applying for an auto loan.

The Dealership Impact

When it comes to financing a new vehicle purchase, timing is everything. While the financing itself is crucial, the dealerships you choose can also impact your buying power. It's important to consider certain times of the month and year that offer the most advantageous buying scenarios. Here's a pro tip: many larger dealerships set monthly quotas for their salespeople, so towards the end of the month, sellers may be more motivated to close the deal in order to meet their targets. But why stop there? Take it a step further and consider the ends of fiscal quarters, like March or June. By covering all your bases, you can ensure you get the best deal possible.

The Down-Payment Impact

One way to ensure your auto lending situation is optimal is to throw down a sizable initial payment to offset the interest rate and repayment plan. Think about the time of year when you are most likely to have some disposable income. For some, this could be during tax return season in the spring, when you may receive a lump sum of money that you can put towards your new vehicle purchase. Alternatively, if your employer's fiscal year ends in the fall or winter, you might expect a year-end bonus, which can serve as a great nest egg for buying a new car. Timing your ability to put more money down with your initial purchase can help you secure better financing terms and ultimately save you money in the long run.

The APR Impact

Speaking of the end of the year, a study from Lending Tree found that the average auto loan APR sits at about 7.01 percent in the month of December; however, the following month of January boasts the traditionally highest APRs for auto loans—8.57 percent. Slight ebbs and flows in the market will largely dictate the offerings in your community, but these sorts of seasonality statistics can save you a bit here or there to help a bunch in the long run.

The Discount Impact

So what about vehicles that are reaching the end of their “newness” on a car lot? What time of year are you likeliest to see discounts on the oldest models before the new ones are ushered in? This should come as no surprise, but data from Edmunds discovered that December is the likeliest month to have the best discounts on a sticker price (average 6.5 percent). As the year comes to a close, car dealerships are eager to clear out their inventory to make room for the next year's models. This creates a prime opportunity for buyers to snag a great deal on the remaining older models. In December, dealerships offer significant discounts as they aim to meet their end-of-year sales targets. With the holiday season in full swing, car shoppers can take advantage of the festive spirit and negotiate even more favorable deals.

January is another month to watch out for, as dealerships continue their efforts to sell off the remaining inventory from the previous year. While the discounts may not be as steep as in December, buyers can still expect to find attractive deals. Additionally, January is a popular time for car manufacturers to introduce their new models, which means dealerships will be eager to clear out the older inventory to make way for the fresh arrivals.

May and November are also months to keep an eye on. In May, dealerships often offer discounts as part of Memorial Day sales events, making it an excellent time to find bargains on older models. Similarly, November brings Black Friday deals, and car dealerships join in on the action by offering enticing discounts to attract buyers.

By being aware of these seasonal trends, car buyers can strategically plan their purchases to take advantage of the best discounts on older models. Whether it's the end of the year or during holiday sales events, timing your purchase right can result in significant savings. So if you're in the market for a new car, keep an eye on these months and seize the opportunity to get the best deal possible.

Want to find out more about auto loan options from a local lender with the know-how and the history of financing stellar deals on a new set of wheels? Levo is the place to get it started.