At the end of every year, car companies advertise car sales and specials throughout the country. These car finance specials promise to save you thousands of dollars as dealers wish to close out the model year inventories. So, the question remains that whether the end of a year is the best time to buy a car?
If you have a bad credit history or are low on money, then buying a car using car finance specials can be hugely beneficial. Below mentioned are 5 reasons why dealers bend over backwards to reduce car prices and clear inventory at the end of a year:
1. Most of the car dealerships employ something called a "floor plan". It means that the dealer does not actually own the car inventory. Rather the inventory is financed by a bank, which charges an interest to the dealership. This interest is based on how much is the dealership’s credit line which they have used for used and new car inventory. So, the more cars that come out of the floor of a dealership at the end of the year, the less interest the dealer has to pay. That is why dealers push out more cars at the end of the year so that they have to pay less interest rate.
2. Also, incentives are offered by most car manufacturer to dealerships for clearing out the current year inventory and make room for the New Year car models. This keeps the manufacturing plants running. So, dealers have many reasons to finalize a deal on December 31st.
3. Holiday season is the third reason that dealers push hard to move cars off of the floor. This is perhaps the slowest month when it comes to car sales as people have been shopping a lot for families and spending time with family. So, car dealerships have to come out with innovative specials to lure customers in to buying a car.
4. Sales managers are given an annual bonus depending on the number of cars they have sold. So, they also work hard to sell more cars in the month of November and December. The staff is motivated by the bonus amount which can be increased substantially by December.
5. Finance or credit companies give special gifts or lower interest rates to individuals who buy a car at the end of a year to boost spending. So, car finance specials are a plenty in December.
Car finance specials are something that can drastically lower your costs and also make sure you get your dream set of wheels.