7 Reasons Why Now’s the Time to Buy a Car
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(Source: mastermaq)
Sure there are more economical options out there. Using public transportation, carpooling or moving closer to where you work are all cheaper than buying a new car and greener besides. But if you really need a new car, there has rarely been a better time than right now. As a consumer in the midst of a recession at a time when automakers are struggling to survive and move vehicles, the deck is stacked in your favor. Why is right now such a good time to buy?
Buying a new car and the virtues of sound personal finance practice don’t often go hand-in-hand. Therefore, we feel obligated to mention that there are other options
For those who rarely travel great distances and have a short commute you can always use public transportation (if available), carpool with others, zip around on an electric scooter, or burn some calories on a bike or with your feet. Have further to travel now and then? Try ZipCar or Enterprise (they pick you up, after all). Have a longer daily commute? Carpool with others, find a reliable used vehicle, or abandon suburbia in favor of the city. Okay we’ve said it and we feel better. But if, for whatever reason, you still need to buy a new vehicle, you’ll want to consider the following factors.
The Real Factors Behind Today’s Vehicle Buyer’s Market
Sales Tax Deduction: If you live in a locality or state that taxes on the purchase of goods, as part of the Stimulus package, you can write-off the sales tax on your 2009 tax return. This can be done whether or not you itemize your deductions or take the standard deduction like the majority of taxpayers. This break was enacted to stimulate the purchase of new vehicles. The vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction. As always, restrictions may apply.
What does this mean for you? Let’s say that you would pay 6% in taxes on the purchase of a $20,000 vehicle, for a total of $1,200 in taxes. You would then be able to deduct that $1,200 from your taxable income. If you’re in the 25% tax bracket, this would equate to a savings of $300.
Huge Rebates: Many auto companies are offering employing pricing or huge rebates. Some, like Chrysler, are even offering both. Shop around, because the lure of employee discounts may not necessarily equate to the best deal. This kind of generosity surely won’t last. Post restructuring and adjustment of production levels, automakers won’t need to unload inventory at the expense of profit, like they are right now. You’ll find domestic automakers offering much larger discounts than foreign at this time because they are finding it more difficult to deplete their excess inventory.
Zero-Percent Financing: Ford and a few other automakers have started offering 0% financing, if your credit is good enough. Consider 0% financing as a great way to limit the risk of a vehicle purchase in this economy. Why pay for everything up front and potentially deplete your emergency savings in this economy when you can borrow for free and spread the risk out over years?
Government Backed Warranties: Chrysler and GM warranties are now being backed through the TARP on vehicles purchased starting in April of this year. This will continue as the companies are restructuring. Domestic automakers, including Ford, are eligible for this plan, but foreign automakers are not.
Payment Protection: Hyundai’s ‘Assurance’ and GM’s ‘Total Confidence’ payment protection plans promise to limit the potential loss that may come from those who are laid off from their jobs. It wouldn’t be a surprise to see other automakers follow suit. As always, read the fine details before buying.
Future Inflation: With the breakneck speed in which the government is printing cash, it’s easy to speculate that future inflation will most likely be significantly higher than it is today. This means your cash today is worth more than it will be in a few years. Combine future inflation with locked in zero-percent financing, and it becomes much easier to justify a vehicle purchase.
Stimulate the Economy: Sure, it may not do much for your personal finances, but at least you can take solace in knowing that you are part of the solution to our economic woes when you purchase a new car. Of course, when you buy local, more of your money stays local.
Are all of these incentives enough to sway you into purchasing a new vehicle if you weren’t previously in the market?
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32 Comments so far
leave a commentI really want to get a new car, and am a sound financial situation to do so, but the biggest thing holding me back is fear cars as we know them will soon become obsolete.
Sweeping changes to how we get our energy and power our lives along with cars like the Tesla S around the corner make me feel like buying a car now would be like buying a DVD player during the Blu-Ray – HD-DVD war.
waiting to buy because you know something better is on the horizon is an insane position to hold. there will always be something better, and thus you will never make your purchase. if the vehicle suits your needs, and is available at an incredible deal, then why not make the purchase?
p.s. the tesla s is not a car on the radar of cost-conscious people. that was a really bad example.
Wait longer before buying a car. Spur the economy by repairing your current vehicle. The market will see a massive influx of used cars for sale as more homes foreclose and people lose their jobs. New cars will go unsold in increasing numbers as fewer individuals have jobs.
This article attempts to stimulate demand for automobiles in a time when the wise consumer knows to wait. Don’t be a fool.
K No one should be a NEW car if your smart take your 3-4k you have saved and buy a used car for like 2-3k spend the other 1k on on restoring it to good working condition btw buy IMPORTS let the US automakers die im sure a new generation of US engineers will come out of no where and bring back US Automobiles to where they should be running on h2o, solar panels and hemp…..
Just my 2 Cents forget the US Gov go America.
You have the Tesla S which has been created in prototype version, but still has a lot of polish to be completed. Most of the great next gen electric vehicles still have quite a bit of time till the come to market.
Unless you’re buying a lemon from a US brand, there’s no point in buying new. The economy is also impacting used car sales. Find a 2-3 yr old car and save a bundle. You won’t get the 0% financing tho…
um…that’s pretty dumb. cars won’t become obsolete before the american car that you buy breaks down.
period.
Dave, I think you’re over estimating the type of changes we will see in future cars. I suggest you watch the Top Gear review of the Honda FCX clarity.
http://www.autobloggreen.com/2008/12/15/video-top-gear-tests-the-honda-fcx-clarity/
If you can find the full Top Gear episode you’ll also see a review of the Tesla roadster.
Companies who have driven *themselves* into the ground like GM deserve what they have coming and do not deserve the public’s support. I don’t see their cars at fire sale prices like they should be yet given all their huge inventory.
I’m going to sit back with Dave and wait for the next generation of cars.
Of course, I’m sure the fed has another bailout lined up for them.
I agree with antimatter. We should all be holding on to our money and waiting. Remember, what will happen if people continue to stop buying new vehicles? THE PRICES WILL GO DOWN!!! We have seen a steady decline in the prices of automobiles (everything actually) and it should continue to decline as we hold out. If we want products to become affordable we must reduce demand. Simple economics people
7 Reasons why not to buy a car:
1. Do you really need a new car?
2. New cars depreciate faster than kenny power’s fastball
3. Car companies are going to be making leaps and bounds with fuel efficiency in the near future
4. Sales tax deduction? Are you kidding me? That’s a 2.4% savings on the sticker price (with 8% sales tax & 30% tax bracket) = 2.4 pennies per dollar spent
5. If you are in danger of losing your job, buy a USED car!
6. Future inflation? So I borrow a bunch of money on a depreciating liability….makes perfect sense. I still owe a bunch of money after 3 years & my car is worth 1/5 of what it costs.
7. The economy is in the shape it’s in because people were buying more than they could afford. The economy will be fixed when consumption patterns are sustainable.
It’s a great time to buy a fuel-efficient car right now (if you can spare the coin, of course). With the drop in gas prices, Americans have lost their interest in gas-sippers and these vehicles are packing the lots. Make a great deal now and it will seem like an incredible bargain the next time that gas prices go through the roof …
If you’re in even better sound financial position, buy one of those cars that people will still love in the future — I’m talking long term investment car.
Thats what I want, hah!
Tesla’s beyond the reach of most folks, but there are alternatives coming. For instance, BYD Co. in China is mass producing plug-in hybrids and pure EV for around $22k, and they’ve announced their intent to commence sales in the U.S. by 2010.
See, everybody has different thinking. But I agree with the author as now’s the time to buy a new car.
@Jason
You’re right, the Tesla was a bad specific example. I was trying to refer to quick-charging electric cars in general.
I completely understand what you mean about there being constant changes in technology, but I feel like this is more of a larger change. There’s a chance for the entire infrastructure of road travel to turn. I don’t want to be stuck with a gasoline car 10 years down the line when gas stations are replaced with charging stations. (I know this might not happen so fast… but I really hope it does.)
I love the “buy a 2-3 year old car” idea.
No 0 interest. You also have a car that might need tires, coolant flushing, brake repairs, has dents/scratches…and to top it off, it might be out of warranty.
So in the end, over five years, you are likely soend just as much as a new car, but you have been driving some smelly, dented, scratched up POS. Great thinking.
i think now is good time to buy a car,bacuase goverment give some way to get it cheaper…and it’s hopeful for american auto products… i published is to SCOOPEA, if you don’t agree my opinion,please buzz me!
http://scoopea.com/Autos/Buy_a_Car_How_to_Buy_or_Lease_a_Car_SUV_or_Truck_Now
hi auther your post are very useful,thanks for sharing!
good stuff, you write more … I read more
If you do decide to buy a new car, at least see what other people are paying to make sure you don’t get ripped off
http://www.realcartips.com
I’m saving for a new car thanks for the advice will start looking a bit more seriously now!
Even when able to buy a new car I always purchased a used one. The last time I bought a brand new vehicle from a dealership was 1976! Although that was more than 30 years ago, I can still smell that clean, new car aroma. However, that scent is like a beautiful woman’s hypnotic perfume. Don’t be fooled by it for just as the pretty dame will try to take you for all your dough, that new car contract will drain your bank account. Buying a new car is never a wise investment. Presently I drive a 15 year old Oldsmobile with 65,000 miles. She doesn’t have the painted whore aroma, but I love her just the same.
Are you nuts?
From a pure financial perspective, there’s really never a good time to buy a new car. It’s a hard commitment to ongoing monthly debt. There’s no substitute for a good deal on a good used car, and plenty of online resources to get good car deals.
Proud stopper of many many car-buy-impulses.
From where I am sitting, not a lot of people can even afford to keep food on the table, let alone buy a new car.
The quality debate between us and asian cars is somewhat pointless if you’re talking a pure value perspective, because a used car with a good track record is a better overall value than a new car – regardless of most variables.
BTW, many new cars have issues too, and parts, insurance and registration is high.
If you have a used car, keep it. Go to repairpal.com if you need repairs – that will help keep you from getting ripped off on repairs.
To bad they dont do this on motorcycles as well. I am down for a new busa
Keep in mind if you buy a car in this economic downturn everyone is paying less which means your new car will depreciate for a lower value.
You simply have to be able say ‘no, thanks at that price’ at least once to the dealer. This gives them a strong message that you are serious about your research.
You should also bring a piece of paper to the dealership and make sure you do all the math of the finance calculations yourself. The point is not that they will do the math wrong. The point is you will see exactly how the deal is structured. Do not be afraid to take the time to do this or look like a fool for mapping out your car deal in the dealership.
My dad swears by this process, http://tinyurl.com/knflt6
Jude is right about double checking the math when your at the dealer. Here are some good car buying and leasing calculators that I have found: http://hoopdi.com/index.php/Calculator-Page/Calculators.html
Yup, recessions are great if you have money. poor, ramenchomping grad student
Good point on the inflation factor. Just to add, I would recommend buying a vehicle that will increase in value over the times ahead..some of the electric cars and biodeisel engines are great places to start. That way, you can at least negate the value lost from the inflated dollar and ultimately break even.
Jason is a bad example