Reasons That Buying a Car at the End of the Year Can Save You Thousands of Dollars!

End of the year car sales and specials are advertised all over the country, promising to save you thousands of dollars as prices are slashed to reduce inventories and close out the model year. Is the end of the year the best time to buy a car? If you have bad credit, how can you take advantage of special year end prices?

Here are 5 reasons that dealers are bending over backwards to lower prices and move inventory at the end of the year...

1) Car dealerships use something that is called a "floor plan". Basically, what that means is that the dealer doesn't actually have ownership of their inventory, but it is financed by a bank, which charges the dealership interest. The interest is charged to the dealership based on how much of their credit line that they have used for new and used car inventory. So... what does this have to do with year end car sales?

The inventory that the dealership has on hand at the end of the month or the end of the year, costs the dealership interest charges that they have to pay. The more cars that are out of the floor plan at the end of the year, the less the dealer pays for interest charges. This motivates dealerships to reduce inventory at the close of their fiscal year.

2) Also, many manufacturer incentives are offered to dealerships for moving out the current year inventory to make room for new year models that are coming out of the manufacturing plants. So dealers have more than one reason to make a deal happen on December 31st.

3) A third reason that dealers push hard to move cars off of the car lots at the end of December, is because they've all had a slow month as people have been more focused on holiday shopping, rather than car buying. Ending the month of December with strong sales numbers helps them to meet their monthly quotas.

4) Finally, sales management bonuses can be based on the total sales production and number of units sold for the given year. This adds additional pressure on dealership staff to move cars, at whatever cost.

If you have bad credit and you wish to take advantage of the end of the year car sales and special prices, then you may find that obtaining an auto loan through an online lending services to be a quick way to get approved for a car loan that you can use locally.