Originally Posted By: 90crvtec
Most of the "wait until the end of the month" advice only works on new car inventory.
The dealers own the used cars. There is no incentive to lose money on them and there are no back end exchanges (no holdback, no dealer cash, no manufacturer rebates, etc. etc.). There is literally no incentive whatsoever for a dealer to sell a used car at a loss. They will sit on a used car until the sun burns out. And usually, that strategy pays off. Someone with terrible credit and bad financial sense will come along and buy a used car with an interest rate in the double digits and the dealer will make a nice profit on both the car and the financing deal. Any time a dealer makes someone a "deal" on a used car, there is still profit baked in. There is no situation where a dealer will sell a used car for less than they paid for it in trade. If the car is absolutely dead in the water and not moving, it will go to auction and the dealer will write it off. They will not sell used inventory at a loss to walk-in customers. This is entirely opposite of new inventory, where a dealer will carve through bone to make one last sale if that helps them meet some hidden quota that will pay them back later.
I have two rules when car shopping. If buying used, I always consider dealers LAST. I will search private ads first and consider privately held inventory first. In my opinion, any Japanese brands less than 5 years old are a terrible value to purchase used. Their purchase price is simply too inflated once they hit a used car dealer inventory. The dealers will do minimal work (brake pads, cheap tires, cheap wash job) and while the car is on the lift for the brake pads, they'll make up some 150point inspection [censored]. Then they'll throw it on the lot with $5k of profit baked in from the trade-in price. It's just a terrible value for the consumer.
If buying new, then buy at the end of the month and if possible, also towards the end of the year. If possible also time the purchase with a model year change and/or model update to take advantage of additional dealer pain. A great example would be the 2015 and 2016 Honda Accord.
The 2016 Accords have been visually refreshed with LED tail lights and fog lights, and new bumpers. This means that the 2015 models are going to languish on the lot because Joe Consumer likes the new-hotness LED lights. Your friend could easily score a 2015 Accord LX for around $19200 if he waits until the end of the month. If he gets a couple of dealers going, he might even break into the 18s for a brand new car with a full warranty. That's the route I go every. single. time.
I'm sorry but I beg to differ with your used car comments, everything else I agree with. After working at 5 different dealerships, we always were more aggressive on new or used cars at the end of the month. While its true the dealer owns the used car, with no incentives, they are also marked up by about $5,000/unit, or more so there's a lot of wiggle room. There is also a very good chance with financing and a warranty a good F&I manager can pick up a nice chunk of change on the back end of the deal. Subprime, credit criminals as they were often referred to were a real home run, with interest rates that were mind boggling. They aren't going to lose any money selling a used car. Ridiculous offers were rejected.
