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The Best Time Of The Year To Buy A Car

Published: 07/08/2020 | Updated: 01/14/2021 by Financial Samurai 44 Comments

Black Audi R8 V8 - The Best Time Of The Year To Buy A Car

Since the global pandemic began, used car prices have gone way up. Everybody is buying a car instead of taking transportation. This post looks into the best time of the year to buy a car.

My 13 year old SUV named Moose feels like it’s on its last legs. There’s a loud whiny noise every time I turn the steering wheel, which likely means the power steering box is cracked. Moose drips engine oil everywhere he goes and now he leaks coolant!

With a Blue Book value of only around $3,000, spending ~$1,000 to fix doesn’t seem prudent. It costs around $100 to fill up his 24 gallon tank and he only gets roughly 16 miles per gallon. Luckily I only drive about 6,500 miles a year.

The other reason why I’m looking to buy a new car is due to the advancement in safety features. Better brakes, better traction control, and more airbags would be nice. I’m not even sure my airbags work after 13 years!

One of my all time favorite things to do is spend time at a car dealer. There’s nothing like inhaling that new car smell and taking the latest models for a spin for free. All told I’ve probably visited a car dealership 30 times in the last 12 months and probably over 100 times in the last five years.

Call me thorough, crazy, an enthusiast, or simply a consumer who shows great constraint for not spending any money on one of his favorite things. Whatever you say there’s nothing better than finding something you love to do that’s free.

Best Time Of Year To Buy A Car

Car salespeople probably hate me, but that’s good for those of you who are looking to get some insights into exactly when is the best time to buy a car. You see, I LOVE to negotiate.

Finding sales people’s breaking points is a scintillating experience. It’s a respectful battle based on gamesmanship and false compliments e.g. “Have you lost some weight Sam? You deserve to buy this new car!”

If you ever want to work on your negotiation skills, practice at a car dealership. They are consistently some of the most aggressive sales people in any industry. This post will focus mainly on the best times to buy a car and not so much on negotiating tactics.

Here are the best times of the year to buy a car.

1) Tax Season

The best time of the year to buy a car is during tax season (January through April). Ask any small business owner who is not in the tax business and they will tell you that business always sees a cyclical slowdown in April. The reason being that plenty of people owe taxes by April 15.

I personally owed a surprising five figure tax bill due to a retroactive law that raised taxes by 3% for those who make more than a certain amount in California. As a result, I didn’t spend money on anything other than necessities in March and April.

(See: What Happens If I Don’t Pay My Taxes?)

From my position as an online publisher, I see an increase in search traffic related to saving money and reducing taxes as opposed to search results relating to making more money, buying stuff, and going on vacations.

2) Memorial Day Weekend. 

The second best time of the year to buy a car is during Memorial Day weekend. Memorial Day is the traditional start of Summer.

One of the key reasons is that auto dealerships need to clear inventory for next year’s models which come out in the Fall. For example, the 2022 BMW 335i Coupe will come out in August 2021. This launch cycle is consistent with practically every major auto manufacture in existence.

Memorial Day Weekend will also have brand new left over inventory from the previous year. These are often the best deals because you not only get a new car, you get a huge discount, and a warranty that starts at the time of purchase and not the time of manufacture.

Time period: End of May and the month of June.

3) Labor Day Weekend

The third best time of year to buy a car is during Labor Day Weekend. Labor Day Weekend marks the end of Summer and the beginning of Fall. Vacation is over and its back to the salt mines baby! A lot of people blow plenty of money during the Summer and the last thing on their mind is to spend tens of thousands of dollars on a new vehicle.

Besides, folks who were looking for a new vehicle probably bought one just three to four months earlier during Memorial Day Weekend. However, because the following year’s models are now out in the Fall, current year models start looking very dated.

Any left over current year models will be heavily discounted. Unfortunately, you will also be tempted by the new models!

Time period: End of August, early September.

4) End Of Year.

The fourth best time of the year to buy a car is at the end of the year. There are always going to be end of year holiday sales. The best day of the year is probably the day before and the day after New Years where one day makes a car one year older or one year newer.

Blue Book values plunge the first day of the New Year for example. Your new 2021 car come January 1, 2022 just doesn’t sound as new as on December 31, 2013.

Time period: End of December.

If you just can’t wait for any of these four time periods, then at least wait until the end of the month. Car salespeople have quotas, and those who are lagging are the most motivated to sell you a car at the lowest of margins.

It’s up to you to find the hungriest or greenest car salesperson at the dealership! The best time to refinance a mortgage very closely mimics the best time to buy a car due to similar sales incentives.

A Car Negotiation Tip To Remember

If there’s one negotiation tip I’ve come away with after speaking to hundreds of car salespeople is that you must always be willing to walk away to get the best price.

Even after you’ve spent an hour negotiating, walk away for a bit and go through the pros and cons. Get some lunch or literally go for a nice long walk. During this time period of wait, your salesperson will be wondering if you’ll ever come back. He’ll start doing the math on how much lower he’ll be willing to go if you do come back.

Finally, I’d just like to say that the best time of the year to buy a car is when you can afford to buy and need a car. Follow The 1/10th Rule For Car Buying to determine if you can truly afford buying the car you’re eyeing.

So long as you follow my 1/10th rule for car buying, you should be good to go!

Auto Insurance Recommendation

Lower Your Auto Insurance Costs: Check out AllState online. They have some of the best plans with the lowest rates around due to their lower overhead costs. It’s worth spending a moment filling out a quote to see if you can save some money. Car insurance is one of the largest ongoing expenses for car owners. Allstate has good driver discounts, and multi-product discounts as well.

Updated for 2021 and beyond.

Multiple Options For Terminating A Car Lease Early

Published: 05/28/2020 | Updated: 01/14/2021 by Financial Samurai 38 Comments

Are you looking options for terminating a car lease early? Since the pandemic began, there’s been an increase in people looking to terminate a car lease early to save money. In difficult times, it’s important to cut costs and boost savings. Terminating a car lease early is a logical solution, however, there are costs associated with doing so.

During my latest car hunting process, one of the questions I had was what to do with my three-year lease agreement with 12 months remaining.

I decided to lease a Honda Fit for my business for only $235/month after tax. About 80% of the cost is deductible since I primarily use Rhino for going to conferences, visiting consulting clients, and giving the occasional Uber ride when they are going my way.

When I was in my 20s, I’d always just pay cash for a vehicle and flip it a year or two later for even money or a small profit. I loved the hunt and the negotiation process. As I got wealthier, I put more value on time and simplicity. I wanted minimal maintenance headaches. I also wanted the option of just handing the keys in when my lease term was up.

But due to the desire of owning a mid-life crisis car and only having one indoor parking spot, I wanted to learn what my options were for an early lease termination.

Here are your options for terminating a car lease early after speaking at length with a couple vehicle leasing department personnel.



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Auto Insurance Basics And Recommendations For Everyone

Published: 04/09/2020 | Updated: 01/14/2021 by Financial Samurai 46 Comments

Besides the purchase price of a car, one must also calculate the potential maintenance cost, and auto insurance cost to determine affordability. We often focus on the first two costs. But, seldom do we realize the auto insurance cost differential until we’ve purchased the car!

Back in 2012, I was so happy to negotiate $2,000 off the initial asking price of a $14,000, black on black, BBS wheels equipped 1997 M3 in 2003 that I didn’t realize my auto insurance would jump from just $500 a year to $2,000 a year!

Had I realized my auto insurance would jump so much, I probably would have negotiated even harder. Or perhaps I would have reconsidered buying a sports car altogether.

Always get an auto insurance quote before you purchase a car please! If you really want to feel good affording a car, follow my 1/10th rule for car buying. It states that you shouldn’t spend more than 10% of your annual gross income on the purchase price of a car.

Having auto insurance is a law you don’t want to break. Accidents happen all the time whether they are your fault or not. If you end up wrecking someone else’s car and injuring a passenger, not having any car insurance could literally wipe you out financially and put you in poverty for the rest of your life! 

Check for a better auto insurance quote via Allstate online. They provide comparison quotes so you know you’re getting a great deal.



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Your Beater Car Can Make You A Lot Of Money In Tax Savings Or Reimbursements!

Published: 04/05/2020 | Updated: 01/14/2021 by Financial Samurai 71 Comments

Beater Car Making You Money

Driving a beater car can make you a lot of money. As a car fanatic who has owned beater cars and luxury cars, let me explain.

After writing, Never Buy A New Car In Its First Year Of Redesign, a reader commented that he netted about $17,500 in reimbursements from driving his 2002 economy car roughly 35,000 miles. At first, I thought there was no way he could receive reimbursements more than the value of his car. Gotta be a loophole!

So like any good Financial Samurai, I decided to get to the bottom of this strange situation with some tax analysis and research. If you have a car, a business, a job that requires travel, or simply love to drive, this post is for you.



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A Car As The Ultimate Status Symbol For Insecure People

Published: 03/19/2020 | Updated: 01/14/2021 by Financial Samurai 154 Comments

Have you been big wigged by someone with a fancy car?

A car is the ultimate status symbol for insecure people. Let me explain why not following my 1/10th rule for car buying is more due to the unhealthy desire for status rather than the inability to be frugal.

As I was returning home in Rhino, my 2015 Honda Fit, a late model Porsche Cayenne SUV came zooming towards me. We were on a quiet and narrow residential street so I was going slowly. I’ve driven the street hundreds of times before and have never had a problem passing a car going the other way.

Instead of slowing down, the driver in the Porsche SUV started honking her horn for me to pull over to make way for her, as if she owned the road.

There was no need for me to do anything since I was well on my side. But if you’re going fast, it’s harder to calibrate the space you have between cars. I slowly kept on going and she slammed on her breaks and started screaming.



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Never Buy A New Car Or A Car In Its First Year Of Redesign

Published: 03/16/2020 | Updated: 01/14/2021 by Financial Samurai 118 Comments

Never buy a new car. Too many gremlins.

If you want to be rich, never buy a new car or a new car in its first year of redesign. I’ve been a car fanatic forever, but I’ve also been a personal finance blogger since 2009. My goal for everyone is to reach financial independence sooner, rather than later.

After owning Moose, my 2000 Land Rover Discovery II for nine years, in 2014 I decided to lease a more fuel efficient car named Rhino, a 2015 Honda Fit. Since I was a kid, I’ve always loved the sportiness and reliability of Hondas. My parents always drove very used Japanese cars.

Even when I owned an $80,000 Mercedes G500 as an idiot 25 year old back in 2002, my fondness for compact cars never waned. The older I got, the less I cared about driving a fancy car. All I wanted was to have a reliable car that required a minimum amount of maintenance so I could cherish my valuable time. I thought Rhino would be that perfect car, but he’s not turning out this way!



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Pay By Cash Or Credit Card? Deciding The Best Way To Save Money

Published: 02/21/2020 | Updated: 01/14/2021 by Financial Samurai 55 Comments

Whenever you buy something, it’s good to ask yourself whether to pay by cash or credit card? There are pros and cons of each. This article will highlight which was is best.

Pay By Cash Or Credit Card Fixing A Car

After six months of a progressively louder clicking sound emitting from my engine, I decided to take my car in for a free inspection.

After only about five minutes, the auto-mechanic mentioned that he was sure my fan unit was broken and needed replacing. Great. “How much?” I asked.

His brother, the operations manager, got back to me and said, “$925 before tax, which is about $1,004 after tax.” Sales tax is 8.5% in San Francisco.

Phew! I was mentally preparing for some $3,000+ bill because the clicking sound was near the engine. When you go on the car forums, you always read about the worst situations. Here’s a short recording if you’re curious.

The operations manager told me I’d have to come back next week because he’d have to order the entire fan unit. No problem. In the meantime, I decided to do what any rational person would do and check what fan units would cost online.

A bunch of options came up that were 30% lower than the shop’s quoted price. The next week, I gave the shop owner a ring and asked why such a huge price difference. He said the difference was between an original part from the manufacturer and a replica without a warranty.

Sensing his weakness over the phone, I asked him if there was any way we could get the price down. After stumbling through some umms and awws, he responded, “Why yes, if you pay ‘cash cash,’ not check, I’ll knock the price down to $750 out the door.“

“Will I still get a receipt and the warranty?” I asked.

“Absolutely,” he replied.

Enticing! What would you do?



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The Average New Car Price Is Unbelievably High

Published: 02/20/2020 | Updated: 01/14/2021 by Financial Samurai 198 Comments

the average new car price

If you were to guess what the average new car price is nowadays, what would you guess? I guessed $23,000, since my Honda Fit is sweet and only costs $19,600 new. Given I’m frugal, leaving a 20% upside pricing buffer seemed logical. Too bad I was way off!

According to the valuation analysts at Kelley Blue Book reported the estimated average transaction price for a light vehicle in the United States was $37,876 in 2020. New-vehicle prices increased $975 (up 2.6%) from February 2019, while falling $126 (down 0.3%) from last month.

Are you kidding me? The average new car price in 2020 is now almost $38,000? In 2021, I’m assuming the average new car price will be even higher, partially thanks to production shutdowns during the global pandemic.

I guess we must all be quite wealthy because I don’t know many people with a median household income of $68,000 who can afford such a price.

What’s also surprising is that the average used car price has skyrocketed as well. Due to the pandemic, more people are buying used cars and taking less public transportation.



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How Much Does My Car Insurance Go Up If I Get A Traffic Ticket?

Published: 02/18/2020 | Updated: 01/14/2021 by Financial Samurai 48 Comments

Car Accident insurance going up

The first thing I did when I got home after receiving a speeding ticket was call my car insurance company to find out how much my car insurance premiums would go up. Interestingly, they couldn’t give me a straight answer.

If I get convicted and don’t go to traffic school, I will receive one point on my driving record for the 10 mph over the speed limit violation.

When I asked my USAA car insurance agent for specifics, she kept on ducking the answer. For all of you who have received a traffic ticket or will get one, this post should help give you a good idea of what’s at stake when it comes to car insurance premiums going up.



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Tips and Tricks to Getting Auto Insurance Discounts

Published: 02/08/2020 | Updated: 01/14/2021 by Financial Samurai 37 Comments

Badly Damaged Car

One of the most important things people overlook when they are about to buy a fancy European automobile is how much car insurance will cost. Auto insurance discounts can save you a lot of money over time. I should know. I’m a recovering car fanatic who has literally bought and sold 8 different cars in the past 10 years. I’ve come to appreciate the intricacies of getting a good deal. And getting car insurance discounts is a big part of that.

On an absolute dollar level, driving a $50,000 car could cost anywhere between $2,000-$3,000 a year, depending on your record. At 4-6% of the annual cost of your car, car insurance is a big deal! 

Cost Of Auto Insurance Vs The Car Itself

The irony is, the cheaper the car you buy, generally the higher car insurance is as a percentage of your total cost.



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