Is Black Friday a good time to buy a car?
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Black Friday can be a time for great deals and savings, which is especially important given inflation’s recent impact on prices. Car prices have risen 6.3 percent since last year and 42.5 percent in September 2022 from February 2020, according to research done by J.P. Morgan. If you’re looking to save money in the near future and can be flexible across brands, Black Friday can be a great time to buy a car.
Black Friday car deals vary by manufacturer
Black Friday car deals are typically set and advertised at the manufacturer level, but local dealerships and large regional chains may also run their own deals. Black Friday car deals typically focus on financing, trade-in credits and lowered prices.
Financing deals are one of the most common Black Friday car deals. The deals are usually backed by the manufacturer — Chrysler Capital, Toyota Motor Credit Corporation, Ford Motor Credit Company and the like. Frequently advertised deals include $0 down-payment, 0 percent APR and no payments for an extended period. All financing deals are only available on approved credit. Generally, the better the financing deal, the better your credit score to qualify.
These deals will usually have an equivalent dollar-off discount if you opt not to go for promotional financing. Even if you’re planning to finance a vehicle, you may be better off securing your own financing and taking the additional money off the sales price.
Many manufacturers and dealerships will offer a set amount off the Manufacturer’s Suggested Retail Price (MSRP) on Black Friday. They also sometimes advertise that they’ll offer a larger dollar amount for qualified vehicle trade-ins. Higher trade-in values lower the amount you have to pay in sales tax on the vehicle you are purchasing, which can be as high as 11.45 percent depending on your city and state.
In addition to purchase deals, Black Friday car shoppers can also benefit from lease deals. If you decide leasing a car is right for you, you may be able to secure lower monthly payments, lower money down, or higher mileage limits through a Black Friday promotion.
Black Friday may not be the best time to buy
The chip shortage that initially had a massive impact on car availability is starting to ease up, but that doesn’t mean cars are as readily available as they were pre-pandemic. Car inventory is still low, which effectively makes it a seller’s car market.
Depending on the specific make, model and trim you want, you may still be facing a months-long waitlist. If you’re very set on a specific car and it must be ordered, the dealer has little incentive to give you a deal on Black Friday. If you can be flexible across different makes, models and styles, you may be able to get better deals later in the year around Christmas or New Year’s Eve than on Black Friday.
Current car buying environment
In addition to general inventory shortages, the current interest rate environment isn’t favorable if you plan to finance a car. Unless you can pay cash, you’ll pay significantly more in interest to buy a car now than you would have in 2021.
When a recession does occur, car buying may decrease, and dealers may be more incentivized to lower prices. Interest rates are also likely to be cut to address a recession. If you don’t urgently need a car, you may want to avoid the Black Friday car sales this year and keep saving cash. Even if interest rates stay high, you’ll be able to put more money down and save on financing costs.
Prequalify before heading to the dealership
Prequalifying for an auto loan if you need to finance a car can help give you a better picture of your budget and price range. Come to the negotiating table equipped with as much knowledge as possible.
You may find that you qualify for competitive interest rates through an online bank or local credit union. This can give you the power to negotiate for an even lower purchase price if you don’t need to chase after any specialty promotional financing the dealership is offering.
You can quickly find out how much car you can afford and compare loan terms and interest rates across multiple lenders using our prequalification tool. It only takes a few minutes and won’t hurt your credit score.
The bottom line
If you need a car soon and can be flexible, Black Friday deals can be found. But don’t expect them to be as great as they were pre-pandemic. If you can wait, you may be able to find better deals at the end of the year or next year when inventory becomes more plentiful.