End
of model year car-buying tips By Terry
Jackson Bankrate.com
There
are few things as exciting as new-model time for people who care
more than a little about cars.
For those who can remember back a couple
of decades, fall was a time of great car excitement. Dealerships
covered their showroom windows as a ploy to build suspense, get
people into the house to see the new models, and then hit them with
the hard sell while they were dazzled by all the new sheet metal.
Now, year-round marketing has taken
some of the edge off of the fall new-car season. There were a few
new "2005'' model vehicles in dealer showrooms as early as
February 2004. Nonetheless, the period from September to December
is still when the bulk of 2005 models are introduced.
So as that magic time arrives, several
big financial questions arise:
Are the 2004s great bargains? Every time
I turn on the radio, I hear my local dealer screaming about being
overstocked and offering a zillion dollars off the factory sticker
to clear his lot.
Is a 2005 worth the extra dough? If a
2005 model has caught my eye, should I get it now and enjoy it for
a full year while I can still call it a new car, or should I wait
a few months and let the new-car fever subside a bit and see if
better deals are offered?
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Are all-new models risky? Price issues aside, what
about the warning your father gave you about not buying an all-new
model in the first year? "Give the factory a year to work out
the bugs, and then get one,'' the old man used to say.
Dealing with the last question first, you can pretty
much chalk up that advice as once valid but past its time.
There was a time when manufacturers, mostly those
in Detroit, would develop a model on an internal timetable and ship
it to customers even if things hadn't quite been smoothed out on
the assembly line.
But today, because of the highly competitive
nature of the business, manufacturers can't be so cavalier about
quality. Sell someone a car that isn't quite ready for prime time
and you can lose that buyer and probably everyone in their immediate
family for years, if not forever.
That doesn't mean a few individual lemons
don't make it onto dealer lots, but buyers today need not worry
that they are the test dummies for manufacturers.
The first two questions are more complex
and depend on what kind of a new-car buyer you are. Do you subscribe
to the cliché, "You are what you drive?'' and need to
have the latest hot vehicle in your driveway? Or are your new-vehicle
purchases done about the time the government conducts a census --
once a decade? Are you a smart buyer who can hold the buy-it-now
impulse in check for a few months in search of a good deal?
Let's deal with those 2004 models first.
As you've been reading, almost every manufacturer has loaded up
vehicles with rebates, incentives and zero-percent financing to
sell off the leftover '04s.
But the second you take possession of
that '04, it's a year-old vehicle. In three years, when your heart
gets stolen by the 2008 Whizbang, that '04 will have taken a bigger
depreciation hit than if you had bought an '05.
Still, the leftover '04s should get
a lot of consideration in these situations:
You're going to keep the car for more
than five years. After
five years, the difference of a year between cars in similar condition
and mileage will usually be less than $1,000 -- and the deal you'll
get on an '04 vs. an '05 now will be greater than that.
There's almost no visual or technological
difference between the 2004 and 2005 model you're considering.
For example, if you've got your heart set on a Honda S2000 sports
car, there are virtually no changes between the 2004 model and
the 2005. Six months from now, no one will know that you're driving
last year's model. And five years from now, when you go to trade
or sell, the extra year's depreciation on the 2004 won't
come close to the money you saved when you bought the 2004.
You're going to lease the vehicle.
If you get the initial purchase price hammered down as far as
possible with rebates, incentives and discounts and lease through
the manufacturer's finance arm, you'll pay considerably less per
month and per mile driven for the '04 than you would for the '05
model of the same car. Yes, the savings will be offset somewhat
by a lower residual
value on the '04 model, but that won't come close to the overall
savings.
When it comes to deciding to take the
plunge on a 2005, these are the factors to consider:
You put a lot of miles on a vehicle. You'll
want the newest car you can afford because when it comes time
to sell, you're going to be in the marketplace with a high-mileage
vehicle and you'll need to stress the car's newer pedigree.
You usually trade cars every three or
four years. OK, this is an expensive habit, but if it's yours
you'll want to get that full year of saying your car is the new
model.
Never -- repeat, never -- commit to a
new model and pay more than sticker price. Every year there
are hot new vehicles that are in such instant demand that dealers
charge more than sticker. The new Mustang and the new Corvette
are two likely candidates for 2005. As cool as it would be to
be the first on your block to own an '05 Corvette, resist the
urge. Because a year from now, after GM has pumped 35,000 of them
out the door, the Vette you paid $5,000 or more over sticker to
get will be worth exactly the same as one sold next May for sticker
or maybe a little under.