Why is Fall a Good Time to Buy a Car?
The end of the calendar year is typically a good time to buy a car. New car models for the next year typically start arriving in September and October.
Car dealerships are also trying to meet annual sales quotas and clear out old inventory, which can result in discounts, incentives, and better negotiation opportunities between September and December.
- End-of-year discounts: Fall is when dealerships start receiving new models for the upcoming year. To make room for the new inventory, they often offer discounts on current-year models. This makes it a great time to score a deal on a new car.
- Manufacturer incentives: Car manufacturers frequently offer incentives like cash rebates, low-interest financing, and lease deals during the fall to clear out older inventory. These incentives can reduce the overall cost of purchasing a new car.
- Less competition: Car buying typically slows down after the summer, so there’s less competition from other buyers. This can give you more leverage to negotiate a better price with dealerships eager to meet their sales quotas before the end of the year.
- New model releases: Fall is when many new car models are released. If you're not set on having the latest model, you can benefit from the discounts on the previous year’s models, which are often still equipped with modern features.
- Weather considerations: In regions where winters are harsh, fall is an ideal time to buy a car, especially if you need a vehicle that can handle winter driving conditions. Purchasing in the fall allows you to prepare your vehicle for the winter ahead.
Mistakes to avoid when buying a new car
- Not doing enough research: Failing to research the car’s market value, reviews, and specifications can lead to overpaying or buying a vehicle that doesn’t meet your needs. Use online resources to compare prices, read reviews, and check the reliability of the model you’re interested in.
- Ignoring the total cost of ownership: It’s easy to focus on the sticker price, but you should also consider the total cost of ownership, including insurance, fuel, maintenance, and depreciation. A cheaper car upfront might cost more overall.
- Skipping the test drive: Never skip the test drive. It’s essential to get a feel for the car and ensure it’s comfortable, performs well, and suits your driving style. A test drive can also reveal any potential issues that might not be obvious at first glance.
- Overlooking financing options: Don’t automatically go with the dealership’s financing offer. Shop around for the best interest rates and terms from banks, credit unions, or online lenders. Pre-approval from a lender can also give you more negotiating power.
- Focusing only on monthly payments: While low monthly payments might seem attractive, they often come with longer loan terms, leading to more interest paid overtime. Instead, focus on the total price of the car and the interest rate.
- Not considering insurance costs: Before purchasing, get insurance quotes for the specific model you’re interested in. Some cars are more expensive to insure due to higher repair costs, theft rates, or other factors.
- Falling for add-ons: Dealerships often try to upsell you on add-ons like extended warranties, paint protection, or other extras that you may not need. Be cautious and only purchase what is essential or valuable to you.
- Rushing the purchase: Buying a car is a significant financial decision, so take your time. Rushing into a purchase can led to buyer’s remorse, especially if you miss out on a better deal or overlook critical details.
- Not checking the vehicle history: If you’re buying a used car, always check the vehicle history report for any past accidents, repairs, or title issues. This can prevent you from buying a car with hidden problems.
- Neglecting to negotiate: Don’t be afraid to negotiate the price, even if there are discounts or incentives already applied. There’s often room for further negotiation, especially on older models or if you’re paying in cash
When buying a new car, whether you're paying in cash or financing the purchase, there are specific types of insurance coverage you should consider to protect your investment and comply with legal requirements:
1. Mandatory insurance in Canada:
Liability insurance:
- What it covers: This is the most basic and legally required insurance in almost all regions. It covers damages or injuries you cause to other people and their property in an accident.
- Why you need it: Liability insurance is required by law to drive legally. It ensures that you can cover the costs if you're found at fault in an accident.
Uninsured automobile and accident benefits insurance are mandatory across the country.
2. Recommended insurance:
a. Collision insurance:
- What it covers: This covers the cost of repairing or replacing your car if it's damaged in an accident, regardless of who is at fault.
- Why you need it: If you're financing your car, the lender will likely require collision coverage. Even if you buy the car with cash, it's recommended to protect your investment, especially for a new vehicle.
b. Comprehensive insurance:
- What it covers: Comprehensive insurance covers damage to your car caused by events other than collisions, such as theft, vandalism, fire, or natural disasters.
- Why you need it: Like collision insurance, comprehensive coverage is usually required by lenders. It's also highly recommended for cash purchases to protect against non-accident-related damage, such as vandalism and theft.
3. Optional coverages:
a. Gap Insurance:
- What it covers: Gap insurance pays the difference between the car’s actual cash value (ACV) and the amount you still owe on your loan if the car is totaled.
- Why you need it: If you're financing your vehicle and put down a small deposit, you may owe more than the car is worth. Gap insurance covers this "gap" in case of a total loss.
b. Loan/lease payoff coverage:
- What it covers: Similar to gap insurance, this coverage pays off the remaining balance on your loan or lease if your car is totaled.
- Why you need it: It's another layer of protection if you're financing and want to avoid being stuck with a loan balance on a car you no longer have.
c. Roadside assistance:
- What it covers: Provides services like towing, battery jump-starts, and tire changes.
- Why you need it: If you want peace of mind on the road, especially with a new vehicle, roadside assistance can be a valuable add-on.
Considerations when paying in cash vs. financing:
• Cash purchase: While you aren't required to have comprehensive and collision coverage by a lender when paying cash, it's still wise to consider them to protect your investment.
• Financing: Lenders typically require full coverage (liability, comprehensive, and collision) to protect their interest in the vehicle until it's paid off.
Final tips:
• Shop around: Compare quotes from different insurers to get the best rates and coverage options.
• Bundle policies: Consider bundling your car insurance with other policies, like home or renter’s insurance, for discounts.
• Review regularly: As your car ages and your financial situation changes, periodically review your coverage to ensure it still meets your needs.
Having the right insurance coverage is essential when buying a new car, as it ensures you're protected against potential financial losses, whether you're paying in cash or financing the purchase. Ask your Western Financial Group insurance expert about car insurance.
