COVID Recovery Resource Center

Is now the time to buy a new car?

The coronavirus pandemic is causing people around the country, and the world, to shelter in place reducing spending on life items such as dining, housing, and cars.

Car sales are reported to be down about 35% compared to last year so far. In response to such a substantial drop in sales, car manufacturers and automotive dealerships are offering several aggressive promotions to entice those that were ready to purchase a vehicle before Covid-19 put a halt to the economy to get back to the table. Simply put, this may be the best time in recent history to make the move into a new car.

What are some of the best deals out there right now?

It is no secret that the Federal Reserve has made borrowing money about as cheap as they possibly can – reducing the Federal Funds Rate to nearly zero. This translates to lenders being able to borrow money for nearly free and pass those saving on to their customers. This is a boon for anyone that is in the market for a new car or has an auto loan with a high annual percentage rate (APR) and qualifies for refinancing. Additionally, manufacturers with their own lending arms are promoting zero percent interest rates for new vehicle purchases up to 84 months, 6 months of no payments, or both.

Another fantastic offer some dealerships are promoting, as the economy begins to heat up, is higher trade-in values for older vehicles towards the purchase of a newer model. Driving away in a new car while possibly reducing your monthly payment can be a fantastic deal for the savviest shoppers. It is a win-win for the buyer, dealerships, and other customers looking for an extra used vehicle for their new graduate or as a backup vehicle.

Whatever the reason, in a free market economy, prices typically drop as rapidly as demand does. Without many shoppers rushing out to purchase a new car, manufacturers and dealers have had to make considerable adjustments to attract everyone they can to keep the wheels moving. Quoting one of the most successful investors in modern history, Warren Buffett, “be fearful when others are greedy, and be greedy when others are fearful.” If you follow that belief, now is the best time to purchase a new car.