Three questions to fuel your car buying journey

1. What should car buyers know before they start shopping?

Don’t be afraid to do your own research. It can help steer your visit toward an offer that best fits your budget. Franzel stresses, “If you have a trade-in, research the approximate value of your car to better understand its value and the offers you might receive. It’s also a good idea to research current interest rates for the term you’re interested in, and make sure you know your credit score — even consider getting pre-approved.”

2. Typically, when is the most ideal time to buy a car?

"Supply versus demand is important when choosing a time to buy a car,” says Franzel. “When supply exceeds demand, the vehicle manufacturer may offer incentives to improve demand, like lower interest rates, cash rebates or lease incentives.” Here’s what Franzel recommends: “You could drive by the dealership to see how full the lot is or research the supply online. In an ideal world, a dealer would have about a 60-day supply of new vehicles and a 45-day supply of used vehicles. The larger the number indicates an excess supply.”

Also, pay close attention to your dealer’s language and urgency. “Are they persistent? Are they trying to put together a deal quickly? If they have an excess supply of inventory, they’ll want to work with you to purchase a car pretty immediately.”

As far as when to buy, Franzel says the end of the year is usually a good bet because dealers and car manufacturers want to end the year on a good sales note.

3. What’s the latest on tax credits and incentives for buying new cars?

Recent federal policy changes aim to incentivize the purchase of new, U.S.-assembled vehicles, which includes new electric vehicles. But there are important constraints to consider. “It’s imperative to understand the income limitations and the exclusion of used cars and leased vehicles,” advises Franzel. “If you are considering purchasing a new vehicle within the 2025-2028 timeframe, this deduction could offer some tax relief for interest paid on new car loans.” To qualify for the deduction, make sure to confirm that the vehicle’s final assembly occurred in the United States. If you file your taxes as single with modified adjusted gross income of $100,000 or less, you can receive the full deduction; it’s $200,000 for those filing jointly. Above those thresholds, the deductions begin to phase out.

According to the IRS, buyers can deduct up to $10,000 in interest paid annually on a qualified new vehicle. “I would recommend consulting with your tax professional for guidance around your specific circumstances and limitations,” says Franzel.

Ready to buy your next ride? There are a lot of considerations to choosing the best fit and getting a good deal, but don’t forget to keep your overall financial picture in mind. Unless you pay cash, you’ll be paying off your car in monthly installments, which will impact your budget. Use our auto payment calculator to come up with an estimate.