Our ardent readers may recall how we’ve previously mentioned that December might be the worst month to buy a car due to the annual depreciation of car value, which might be something that you will need to take into consideration especially if you are planning to resell your car sometime in the future.
If we are to observe the fact that a car is worth less with each successive calendar year (not counting days or months), it should follow that January would be the best time to buy a car and retain its maximum resale value. However, while you may not need to worry about rapid depreciation when buying a car in January, there are still other factors you need to pay attention to, like incentives and rebates.
What Incentives and Rebates Are We Talking About?
At their most basic, incentives and rebates are things that entice the consumer (that means you) to buy a particular product. In the case of cars, the common incentives are: car rebates, low-interest financing, and special freebies. Let’s go through these one by one so you’re aware of them and know how to factor them in the next time you go to a car dealership.
Also referred to as cash rebate, or cash back. Cash rebates are essentially money that the seller gives you to entice you into buying the car. This amount can be somewhere from a few hundred Ringgit to several thousand. Of course, nobody ever buys a car and drives off with a bag full of cash rebates.
Typically, the rebates are applied to the cost of the car. For example, a car that’s priced at RM120,000 can have a cash rebate of RM26,000 which means you only pay RM94,000 on the car. It’s good to remember that rebates are applied to the final price of the car. So, if you’re negotiating for a lower price, it’s best to speak in terms of the full price of the car, before any rebates or incentives.
If you’re buying a big-ticket item such as a car, it goes without saying that you’d need to borrow some funds. A low-interest car loan would then be a good incentive to get people to buy a new car since a lower interest means you’re paying less month to month. Low-interest financing are typically deals between the dealership and the manufacturers made to boost the sales of a particular model. Usually, if a dealer offers both this cheaper rate and a cash rebate, you would have to choose between one or the other. Make sure to do the maths and pick the one that will save you the most in the long run.
Read Also: Car Loan Basics for Absolute Beginners
If you’ve ever purchased anything that requires at least a debit card, you’re sure to have asked for some free gifts. These are also part of the incentives that dealerships may offer you to sweeten the deal. Normally, these would be things like a free umbrella, dashboard ornament, free maintenance, car insurance coverage for one year or other complimentary services.
When taking these into account, remember that they have done the maths on this more times than you have. So whatever they include, while nice, is certainly not more valuable than a few thousand off the final price or a few points off the interest rate of the loan. When negotiating for the best price, don’t let these little freebies sway you too much.
Buying a new car at the start of the new year can be the smartest thing to do. Now that you’re also equipped with the proper know-how when it comes to handling incentives and rebates, we hope you can make a more informed decision when figuring out which perk to go for on your next car purchase. In light of that, if you do decide to purchase a new car, securing a car loan with affordable interest rates that matches your requirements would be your next objective.
Ease the process of seeking and comparing by using our comparison tool to find the best hire purchase loan in town. Happy hunting!
Do you have any experiences of buying a new car before or after the New Year? Let us know your thoughts and comments in the comment section below.