Buying a New Car Will Finally Be Cheaper This Year (2024)

FAQs

Buying a New Car Will Finally Be Cheaper This Year? ›

New car prices and auto loan rates are projected to fall in 2024 as market conditions improve for buyers. Cox Automotive, a research and consulting firm, forecasts that the supply of new cars will finally return to normal levels this year.

Now, however, may be the right time to upgrade that older model, industry watchers say. "2024 is probably the best year since the pandemic to buy a new car," Mark Schirmer, director of industry insights at Cox Automotive, told ABC News. "2021 and 2022 were really difficult years.

Though inventories of new autos are still well below the roughly 4 million level that prevailed before the pandemic, analysts and dealers say the rising availability suggests that 2024 will be the most affordable year of the past five in which to buy a new car or truck.

December is the cheapest month to buy a car because that's when car dealerships are clearing their inventory to make room for next year. It's also when car salespeople are competing to meet their yearly, quarterly and monthly quotas.

The Month of October

For the auto industry, the new year really kicks off in October, with many all-new and redesigned models arriving in dealer showrooms. That means they need to get the old models off the lots. The changeovers lead to more incentives and discounts than shoppers will find in most other months.

Car Prices Will Likely Continue To Decrease

“Last month, the average price for a new vehicle was [$47,936] — a [1.4%] dip from last year, according to the latest KBB data. This suggests that new car prices might drop in 2024.” One factor that could lead to price drops is an oversupply of new cars.

Despite that, prices are still higher than they should be, as a new iSeeCars study found that the average new car is priced above MSRP, though they're slightly less painful than they were a year ago.

Auto loan rates for new and used vehicle purchases fell in the first quarter of 2024 to 6.73% and 11.91%, respectively, down slightly from the 15-year highs we saw at the end of 2023, according to Experian.

However, you can use the guideline of 2 or 3% on less expensive brands, and 5 to 10% on luxury brands as a rule of thumb. Regardless of if you're buying a Kia or a Mercedes, the reality is there isn't too much room to work with when just looking at the mark up. This is where factory incentives come into play.

Is it financially better to buy a new or used car? ›

According to Experian's State of the Automotive Finance Market Report from Q3 2023, the average monthly loan payment on a new car was $726, compared to $533 on used cars. That's despite the loan rates being higher for used vehicles (11.35%) compared to those for new cars (7.03%).

Read our editorial guidelines here . New cars lose around 20% of their value in the first year, and they'll be worth about 40% of what you paid after five years. This process is called depreciation. Depreciation measures how much value your car loses over time due to wear and tear, age and mileage.

By waiting until 2024, you'll likely have access to vehicles with more advanced and refined technology compared to what is currently available. Buying a car at the end of the year often presents unique opportunities for discounts, making it a potentially ideal time to purchase a vehicle.

Worst Times

Warmer weather and tax refunds bring buyers out in droves. With so much demand, dealers are far less likely to be in the mood to lower their prices. Plus they still have several months before the new models flood the lots. At the beginning of a new model year (assuming you want next year's model).

As for which day of the week you should go in, "Monday is usually the best day of the week to buy a car" since "showrooms will be the least busy," according to MarketWatch. In Edmunds' opinion, however, Tuesday or Wednesday can be a good bet, especially in areas where dealerships aren't open on Sundays.

October through December is a good time to buy a used car. These months coincide with the peak new-car buying season at the dealership, which means more trade-ins are entering the used car inventory.

The average monthly car loan payment in the U.S. is $735 for new vehicles and $523 for used ones originated in the first quarter of 2024, according to credit reporting agency Experian. It's worth noting that some recent reports from other industry analysts place the average car payment even higher.

According to the most recent Cox Automotive research, the typical new car loan interest rate was an average of 9.7%. Vehicle affordability is improving, but the second half of 2024 will look better for car shoppers. Additionally, any interest rate cut, if one comes, could help affordability.

A car's MSRP is not the lowest price a dealer can accept, and you can use it as a starting point for negotiations. With that in mind, it's important to do some research to figure out the car's value. You can find this information by visiting industry resources, such as Kelley Blue Book, NADAguides or Edmunds.

It's usually a matter of supply and demand. If this is the case for a car you really want, you should consider just paying the sticker price and moving on with your life. But there are those buyers who try to adhere to the "never pay retail" battle cry, even for a hot car that's just come on the market.

How overpriced are cars right now? ›

But that's still 29% higher than the average pre-pandemic price of about $38,000 in February 2020. Used car prices averaged $31,556 in March, down from a peak of $32,889 in April 2022 but still 33% more than March 2020's $23,691.

California's pace of improvement is expected to ease overall in 2024 compared to last year. While registrations are predicted to exceed 1.8M units, the increase will likely remain in the single digits.

Individual vehicle prices aren't going down, but the average car price is overall. That's because automakers are mixing up vehicle types and trims, according to analysts at AlixPartners. Combined with incentives improving, average transaction prices could fall 7% by 2025.

Automakers typically begin rolling out their 2024 model year vehicles in the summer of the previous year – or sometimes earlier. There are a number of 2024 model year vehicles that have already been released prior to the new year while others will debut in just a few months.