Best Time to Finance a Car: Comparing Summer and Year-End Rates

Timing is important to consider when purchasing your next pre-owned vehicle. Negotiating selling prices, finance deals, dealership promotions, and even inventory numbers vary throughout the year.

Credit history also plays an essential part for receiving specific loans. However, the season itself impacts availability incentives, financing programs, and even price margins for certain dealerships.

Here at Hi Lo Auto Sales, we will help you understand the differences between summer and year-end financing options and inform you of the factors that influence your loan costs.

What Factors Impact the Interest Rate of Your Car Loan?

Your credit record and credit score
Income level and debt-to-income ratio
Amount of down payment
Length of the loan
Age and value of the car
Market-based interest rates

While these factors impact the interest rate of your car loan, seasonal promotions can ease your total finance cost through reduced costs of purchase or financing options.

Summer Financing: More Inventory, More Choices

Summer is one of the busiest times for car shopping. People get ready for vacation, new grads buy their first cars, and a lot of people decide to upgrade their ride for upcoming travels.

To accommodate demand, dealerships usually stock up during summertime. You will have the opportunity to:

Browse through a wider range of pre-owned cars
Get deals occurring near Memorial Day, Independence Day, and Labor Day
Find good prices on popular cars, trucks, and SUVs
Search through more options of makes, models, and features

Summer isn’t the only time to find low prices, but it is likely to provide you with large inventories and lots of options. If you have been looking for a particular SUV, truck, or family car, you have a good chance of finding it during the summer season.

Year-End Financing: When Savings Can Add Up

With year-end approaching, many dealerships are gearing up for their monthly, quarterly, and annual sales targets while getting ready for their new inventory. It is for this reason that year-end has earned a reputation as one of the best times to purchase a car.

Buyers might be able to:

Enjoy discounts from the dealership on leftover inventory
Take advantage of financing deals from cooperating financiers
Negotiate prices more freely
Attend year-end sales

The above factors do not necessarily guarantee that all individuals will enjoy reduced interest rates because the biggest determinant of the interest rate is credit history. However, when combined with these opportunities, buyers can help reduce the overall cost of their next pre-owned vehicle.

Financing Incentives vs. Purchase Incentives

Not every promotion affects your loan the same way. Some incentives lower the purchase price of the vehicle, while other incentives reduce the cost of borrowing money by means of financing deals. There are cases where consumers have a choice to make between either a cash incentive or a financing incentive.

This is one of the reasons that comparing the overall deal is more important than focusing on one individual incentive.

For instance, a higher interest rate on a less expensive car may still result in a lower overall cost than a lower APR incentive applied to a more expensive car.

The Real Cost of Financing

While it is easy to look at monthly payments and interest rates, neither provide the complete financing cost.

The total financing cost includes:

Price of the vehicle
Down payment
Loan period
Amount of interest accrued for the entire loan period
Incentives or discounts offered by the dealer or finance agencies

For example, increasing the loan period to decrease monthly payments may increase the amount of total interest you will pay. Meanwhile, buying a car with reduced prices due to end-of-the-year promotions may be cheaper despite potentially increased interest rates.

Lower monthly payments do not necessarily mean lower expenditures. Comparing all financing options will allow you to determine the lowest total cost possible.

Does Timing Matter If Your Credit Isn't Perfect?

Yes, but only to some extent.

While seasonal deals may help you save on the vehicle, lenders will still consider each application and take into account credit history, income, loan amount, and down payment. These factors influence the financing terms you're offered.

Increasing your credit score has the ability to increase your savings regardless of timing. However, if you have already chosen a reputable used car that you can afford, waiting for another sale might not be worth it.

Summer vs. Year-End: Which Is Better?

The best choice between the two depends on personal preferences and situations.

Summer allows for:

More inventory choices
Reliable transport for the traveling season
Good test drive conditions

Year-End allows for:

Maximizing your chances of savings
Potential limited stock
Year-end sales and deals

Regardless of season, the best time to purchase is always when you find the right vehicle with the best financing for you. If you are content with the total cost and vehicle, consider it bought.

Find Financing That Fits Your Budget at Hi Lo Auto Sales

Whether you choose to buy in the summertime or wait until year-end deals, what is most important is knowing the finance department is working for you. At Hi Lo Auto Sales, we can help you compare interest rates, loan terms, incentives, and total costs.

At Hi Lo Auto Sales, we want to make your financing experience easy and relaxing. We will help you sort through your options and show you the best pre-owned cars for your lifestyle and budget.