One of the more common questions that consumers ask revolves around the “best time” to buy or lease a vehicle.  Usually it is asked with the additional suggestion - “I hear that it is usually at the end of the month.”

Well, for all of you that have heard that tale, you are correct. Typically it is better for the consumer to purchase or lease their vehicle towards the end of the month.

First off, dealerships operate on a monthly cycle. Unlike large companies that focus on the quarter or year; dealerships have monthly Financial Statments to which the employees are tied for their personal compensation.  So it is in the interests, financially speaking, for the General Manager right down to the Salesperson to sell you a car.  And if time is running out, you have an advantage. The employees are attempting to achieve their monthly targets not to mention their bonus and commission plans.

Secondly, dealerships typically receive targets from their respective manufacturer that could involve payments for achieving certain sales results, incentive trips for upper management, as well as preference for future inventory allocation.

As a result, you will see dealerships advertise larger discounts as the end of the month approaches.

Dealer discounts, however, are the smaller portion of the savings a consumer can achieve.

It is the manufacturer incentives that make the end of the month so special.

Just as dealerships and their employees are trying to hit their monthly targets; so are the manufacturers. And as their day supply of inventory climbs, they need the right mix of advertising and incentives to create demand in the marketplace since without sales - the dealerships will not order more vehicles. Without orders - the factories have to slow down or possibly shut down.  Therefore, although incentives are offered at the beginning of the month and typically run until the end of the month; it is the additional incentives that supplement the transaction that are only offered at month end.  Typically the last week of the month.

Now here is the kicker. Twice a year every manufacturer will have significant incentives: (1) at the end of the model year in August; and (2) at the end of the calendar year - between Christmas and New Years.  So if you can wait - the times you can act with almost certainty are the end of Summer and December.