Key Takeaways:
Car prices are expected to decrease in 2024 due to increased production of new vehicles and stabilizing supply chains, making it an advantageous time for both new and used car buyers.
At the end of 2023, the average price of a used car was $28,371, 4.4% less than the average a year earlier⁵. New and used car prices continued to fall in the first quarter of 2024. Industry experts predict that used car prices could decrease by as much as 14% on average by the end of 20246.
With higher floor plan costs, rising lot inventories and incentive spending on the rise, dealers will be motivated to negotiate. Therefore, the longer you can wait to buy a car in 2023, the more likely you'll be able to negotiate thousands off of your deal.
Best month - December has consistently scored high on both frequency and size of discounts, making it the best month of the year to buy a car. Holidays - Holidays are also good times to land a deal. You can score big with Black Friday deals, Christmas, or New Year's Eve.
On the other hand, December scores highly on both frequency and size of discounts — it's the month with the highest average discount and third highest frequency of deals — making it your best bet overall to find a good deal.
NerdWallet recommends spending no more than 10% of your take-home pay on your monthly auto loan payment. So if your after-tax pay each month is $3,000, you could afford a $300 car payment.
This is in contrast to last year when borrowers were met with climbing interest rates driven by the four rate hikes in 2023. As of late 2024, the Fed has lowered rates three times, which will help to continue bringing rates down into 2025.
Since January is the slowest month for sales, it is much slower for luxury cars to sell. Because of this, it may be more challenging for the most expensive ones to be taken out of your parking lot. To sell out the most expensive ones in your inventory, January is the best time to offer promotional deals to the buyers.
Mondays. Monday can be the best day of the week to buy a new car. Other potential shoppers are often at work, so representatives at car dealerships are focused on anyone who comes in the door.
We almost forgot what that feels like, but our data show 2024 could shape up to be a buyer's market provided you're looking to buy new. New-car inventory increased by 36% year over year, with inventory levels close to what they were in February 2021 before pandemic shortages really started to hit.
Tesla Model 3, Kia Niro EV, and Maserati Levante saw the biggest price drops. Six out of the seven vehicles with the sharpest depreciation are electric models. Used EVs lost value four times faster than gasoline cars, according to the study.
The latest data from Cox Automotive shows that new car transaction prices continue to fall, and with more affordable new cars, the used car market is under downward pressure. All signs point towards more price drops to come in 2024 (see our market forecast here). But it's not all good news.
Considering the strong Q4, full-year 2024 U.S. auto sales, as estimated by Kelley Blue Book, are expected to reach approximately 15.85 million units, reflecting a 2.3% increase from 15.55 million in 2023 and slightly above Cox Automotive's forecast of 15.7 million shared at the beginning of the year.
Most 2024 cars and trucks will likely go on sale in 2023, though dealers may begin taking reservations a lot sooner. An inventory shortage has forced many automakers to limit production, and some brands have already started giving early signs of when their 2024 cars will come out.
Buy on Monday
Some people advise shopping for a new or used car on the busiest day of the week, usually on the weekend. The thinking is that salespeople will be so busy, they'll try to reach a quick deal so they can move on to the next customer and make their money on volume rather than one overpriced car.
As a rule of thumb, car manufacturers usually release new models in the previous year's fall. Also, interest rates are low in December, making it possible for automakers to offer low-interest loans. Lest we forget, you'll likely get good discounts in November and December.
Overall, the best time to buy a car is the last few days of any month. Try to time your trip to the showroom to avoid busy Saturdays and Sunday, though. And if possible, skip January and February, when discounts typically aren't as steep as in other months.
Experts say that 2024 will be the best year to purchase a new car since 2019. As interest rates slowly drop throughout the remainder of the year, payments will become more manageable. Don't overlook manufacturer rate promotions, as they can save you thousands of dollars.
However, nearly every economic forecast is predicting lower rates in 2024. The Mortgage Bankers Association's Mortgage Finance Forecast for September 2023 predicts 30-year fixed mortgage rates will be in the 5% range for most of 2024: Q1: 6.1% Q2: 5.8%
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
The average monthly car payment is $737 for new cars and $520 for used. Several factors determine your payment.