Car Buying Tips: Should You Buy a New 2006 or a New 2007 Model?

Summary

Deciding whether to buy the latest car model or the previous year's version can be tricky. This article explores key factors such as price differences, trade-in values, new features, and financing options to help you make an informed decision. Learn how to weigh the pros and cons of each option to find the best deal for your needs.

Price Differences: The Bottom Line

"Clearance" is often a buzzword that makes consumers believe they are getting the best deal. However, it's crucial to compare the best deals on both the new and previous year's models before making a decision.

For instance, consider the Lincoln Mark LT. As of January 2007, the 2006 model had $5,000 in total rebates and around $5,100 in negotiated discounts. In contrast, the 2007 model had $3,500 in rebates and approximately $4,800 in negotiated discounts. On a $40,000+ vehicle, the $1,800 savings might seem significant, but is it worth opting for the older model? Let's explore further.

Trade-In and Resale Value

Short Cycle Buyers (1-3 Years)

If you plan to trade or sell your vehicle within 1-3 years, the newer model is generally a better option. Most vehicles experience over half of their depreciation in the first 1-3 years. For example, a 2006 model bought today and sold in 2009 will be worth $3,000-$4,500 less than a 2007 model, despite the initial $1,800 savings.

Long Cycle Buyers (5+ Years)

For those planning to keep their vehicle for 5 or more years, the difference in value between a 2006 and a 2007 model becomes negligible. For example, an '06 Toyota Camry with 80,000 miles in 2012 will be worth nearly as much as an '07 Camry with the same mileage, assuming no significant changes in style or features.

Mid-Cycle Buyers (3-5 Years)

If you fall in the middle, consider additional factors such as new features and financing options.

What's New?

The 2006 Honda CR-V is a solid SUV, but the 2007 model offers significant improvements. Similarly, the 2007 Chevy Silverado boasts substantial upgrades over its predecessor. Research the new features to determine if they justify the extra cost.

Selection and Availability

Last year's models are often leftovers for a reason. They may have less popular configurations, colors, or engines. However, don't assume the perfect vehicle isn't out there. Work with a dealer who can search their central inventory to find the right match for you.

The Interest Rate Trap

Zero percent financing sounds appealing, especially for clearance models. However, this option is most beneficial for those who plan to keep the vehicle for the full loan term. Short cycle buyers might save more by opting for rebates instead of low-interest financing.

Final Tips

Look for the Optimal Time

There is usually a short window when the previous model year offers the best deals. Stay in touch with your dealership to identify this period.

Consider Custom Orders

Ordering a vehicle can save you money and ensure you get the exact options you want. Many manufacturers offer better incentives for custom orders, allowing you to choose the best deal available when your vehicle arrives.

Keep Researching

Utilize resources like Kelley Blue Book and Edmunds to stay informed. Contact dealerships and check their websites for the latest offers. A little effort and common sense can go a long way in securing the best deal.

Conclusion

Making the right choice between a new and previous year's car model depends on various factors, including price differences, trade-in values, new features, and financing options. By considering these elements and doing thorough research, you can make an informed decision that best suits your needs.

I hope this guide helps you in your car-buying journey.