Personal Finance

Car buyers: Now is the best time of year to score a deal

Key Points
  • The average dealer incentive on new vehicles is at about $4,300, an all-time high.
  • The biggest discounts are on 2017 models, especially sedans.
  • Consumers with great credit could also get zero percent financing on some models.
Right now is the best time of year to score a deal on a car
Right now is the best time of year to score a deal on a car

Consumers hunting for a new car have a few things working in their favor this week: End-of-year sales targets, unsold 2017 models and aggressive discounts.

"Automakers are really offering incentives to move all this metal," said Kelsey Mays, senior consumer affairs editor at "This is still a buyer's market because those incentives are so high."

The average dealer incentive was $4,302 as of mid-December, 2.7 percent above the previous record of $4,188 set in November, according to data from J.D. Power and LMC Automotive. In 17 of the last 18 months, incentives have averaged at least 10 percent of the manufacturer's suggested retail price, or MSRP.

Automakers are really offering incentives to move all this metal.
Kelsey Mays

After robust sales in most of 2015 and 2016, some analysts expect overall sales in 2017 to be below last year's final tally of 17.5 million. Various forecasts also predict that 2018 will mark a further reduction in sales, coming in between 16 million and 17 million autos. As such, experts project dealer discounts to continue in an effort to lure customers into showrooms.

"Even though a lot of current deals will disappear soon, incentives will probably remain high for the next few months, or even many months," Mays said. "There's nothing to suggest the industry will slow down with its incentives."

Right now, the biggest discounts generally are on 2017 models — especially on sedans. Consumers' shifting preference for SUVs and trucks has left an abundance of sedans and other less-popular models on dealer lots.

Sampling of average new car prices (before dealer incentives)

Segment Nov. 2017 Nov. 2016 % change
Compact car$20,291 $20,365 -0.4
Compact SUV/crossover$28,990 $28,092 3.2
Electric vehicle$39,447 $39,688 -0.6
Full-size pickup truck$47,393 $46,990 0.9
Full-size SUV/crossover$60,487 $60,915 -0.7
Luxury car$57,339 $56,684 1.2
Minivan$35,621 $34,082 4.5
Mid-size car$25,510 $25,210 1.2
Mid-size pickup truck$32,601 $32,916 -1

Source: Source: Kelley Blue Book

"The incentives are driven by 'what do we need to get rid of,'" said Carroll Lachnit, senior consumer advice editor for "The incentive can be in the 30 percent to 40 percent range, depending on what you're looking for."

For instance, Edmunds research shows that for a 2017 Jetta — which comes with a price tag of about $18,650 — discounts in the $7,400 range are possible, depending on the trim and where in the country you live.

Additionally, for consumers with great credit, zero percent financing deals can be available through some manufacturers. For instance, as part of its end-of-year holiday sales push, Ford is offering zero percent financing on some 2017 models for 72 months, plus a $1,000 cash bonus, if you use Ford Credit financing.

Moody's: We might be approaching an inflection point for autos
Moody's: We might be approaching an inflection point for autos

While the deals might stick around, the perfect storm of end-of-month and end-of-year sales goals won't come around again for 12 months.

"If you're actively looking, I wouldn't wait," Lachnit said. "[Dealerships] won't have the same kind of pressure they do now for meeting sales goals."

Here are some tips for preparing for your trip to the dealership.

Assess the market

Before you even set foot in a showroom, it's worthwhile doing some research online first. If you have some flexibility, you might discover a great deal on a car similar to the one you were thinking about.

You also might find a difference in price among local dealerships on the same car.

"Depending on where you live, you could find dozens of the same car available," Mays said. "If you can get dealers to compete with each other, you should be able to negotiate the price down further."

Secure preapproved financing

Unless you plan to pay cash, you should get preapproved for a loan from a bank or credit union. While there's no obligation to use the preapproval, you'll at least be armed with a comparison when the dealership offers its best loan terms.

"Have that preapproved loan in your back pocket," Mays said. "Dealers will typically try to compete with that and offer a competitive interest rate."

Collect key documents

Make sure you're armed with all the documents you'll need to complete a sale: Your driver's license, the title and registration for your existing car (if you're trading it in) and proof of insurance. If you are making a down payment, call the dealer ahead of time to find out what forms of payment it accepts.

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