A row of cars sitting on a dealership lot

Times have been tough for millions of Americans since the coronavirus pandemic shut down much of the economy, but for those with the financial wherewithal, it's a smart time to buy a new car

Although auto sales—which had fallen precipitously during the shutdowns—have picked back up, automakers are aware that consumer confidence is low. Low-interest and zero-percent financing deals are still plentiful, along with cash-back offers and attractive lease terms. To further entice consumers worried about job security amid a shaky economy and rising unemployment, many car manufacturers are pushing deferred payment plans that can delay the first payment on a new car for as many as two or three months. 

In conversations with dealers, analysts, and other industry insiders, Consumer Reports found that sales, while much stronger than they have been in months, are volatile. That could impact incentives deeper into the summer.

"Automakers are likely committed to incentives they planned for through June," says Eric Lyman, senior vice president of ALG, TrueCar's analytical arm. "However, if demand continues to remain strong in June and inventory doesn't start getting replenished until mid-July, we could see automakers pull back on incentives in July."

Demand for used cars has been high for the last two months as concern over the economy has pushed consumers to try and get more car for their money, says Lyman.

"We saw wholesale prices dip, but since consumer demand stayed strong, wholesale prices are back up," he says. "There are not as many deals to be had as a result."

More on car buying

Click on any manufacturer or dealer website and you're bound to see zero percent financing for seven years offered for many models, as well as lease deals featuring low monthly payments.

There are lots of special offers right now. For example, Chevrolet is offering up to $5,500 cash back on certain Silverado pickups, in addition to zero percent, 72-month financing. Subaru is still offering zero percent, 63-month loans. There are also deals at the local level as individual dealers do what they can to move inventory.

Other automakers have scaled back incentives. Jeep was offering $3,250 cash back and zero percent, 84-month loans on certain Grand Cherokee models, but offers are now limited to low-monthly-payment lease terms. Chevrolet in May was offering $8,500 cash back and zero percent, 84-month financing on some Silverado trucks in May.

"Since the beginning of 2020, average savings off MSRP on the TrueCar Marketplace have trended higher than the last couple of years, with significant upticks in April and May compared with prior years," says Nick Woolard, director of OEM and affinity partner analytics at TrueCar. "While a large share of June sales will come right at the end of the month, June has started out softer when it comes to average savings off MSRP than what we saw in April and May."

Lower Payments

Lyman of TrueCar says the idea behind all of the deals and special offers is to increase consumer confidence to buy cars during a time of economic uncertainty, often by engineering lower monthly payments with low or zero interest rates and by lengthening loan terms beyond the typical 36–60 months. 

Lyman points out that long-term loans come with their own challenges. For someone who can keep a vehicle for seven or eight years, a longer-term loan at zero percent can be beneficial. But consumers who switch vehicles every few years might be better off with a lease.

Alain Nana Sinkam, TrueCars’ vice president of strategic initiatives, says that consumers who take out zero interest loans on new cars can come out ahead if they invest the money they would have spent on interest payments into something that could gain interest, or into something like a mortgage that would lower financial liability.

“A savvy and engaged consumer would take the zero percent, 84-month loan and siphon the monthly savings into an investment,” he says.

In general, CR’s experts advise caution in taking out long-term loans, though in the right situation they can represent big savings over time. 

“Buyers should be aware that they might ultimately pay more depending on the annual interest rate, and no one wants to owe more on a car that's worth less than the remainder of the loan,” says Gabriel Shenhar, associate director of CR’s auto test program.

Do the Research

Consumer Reports recommends that shoppers research cars and various option packages online before contacting a dealership, says Shenhar. Shoppers should feel empowered to take the initiative in this process, identifying the exact car they want in their own time frame, including negotiating a price or lease deal over the phone or through email, he says. This strategy not only lessens the time exposed to any sales pressure but also maximizes social distancing. Physically going to the dealership might only involve a test-drive and the signing of final papers, he adds. If you don’t have a specific deal worked out ahead of time, you still should have a model preference in mind, whether you're arriving to a dealership or shopping online or via email with a salesperson.

CR members can research our detailed ratings and reviews to find the best match that meets their needs. (Become a Consumer Reports member.)

TrueCar’s extensive dealership network of more than 16,500 locations also can be accessed through the Consumer Reports Build & Buy program, a car buying service that allows shoppers to configure the car they want, compare local transaction prices, and have participating dealers provide their best offer, which can and should include any of the multiple incentives now being offered.

Online Sales More Available

Lyman of TrueCar also points out that buy-from-home programs are a rapidly growing part of what dealers are doing right now to lure in cautious would-be customers.

TrueCar also has developed a Buy From Home program that allows consumers to handle all aspects of a car purchase without going to a dealership. About 30 percent of the network dealers are participating, with more expected to take part. Dealers with the Buy From Home option are identified by a special logo in car searches on the website.

As with the generous incentives, online sales are aimed at getting would-be customers buying again. 

"We're seeing dealerships saying yes to more things now more than ever before," says Jeremy Anspach, CEO of Purecars, a data analysis firm that helps dealerships optimize sales strategies. "If a customer requests home delivery, the answer now is much more likely to be, 'What's your address?'"

There are also several ways to begin the buying process without leaving the comfort of home. The first stage is researching different models that fit your criteria, and, potentially, scheduling a test- drive. (Many dealers are allowing customers to test-drive cars without a dealer present, or are delivering test vehicles to customers' homes.) Most dealer websites contain tools for researching vehicles, and many now include a way for customers to apply for financing online, too. Some dealers can mail paperwork that needs to be signed. The level of physical disengagement depends upon location—every state has different regulations for things like contract signatures and vehicle delivery.

"Just like in 2008 and 2009 when we went through the big recession, there is a lot of motivation out there by manufacturers and dealers to sell new and used vehicles," says Mark Schienberg, president of the Greater New York Automobile Dealers Association. "If dealers can get a used car that's depreciating off their lot, they're very anxious to do it. The same thing is true with new cars."

Shop CR's Car Buying Service From Home

The Consumer Reports Build & Buy Car Buying Service is evolving to face the challenges of shopper needs during the pandemic. The core service engages a nationwide network of over 16,000 participating dealers to provide up-front pricing information and a certificate to receive guaranteed savings off MSRP. A growing number of dealerships are enrolled in a Buy From Home program, enabling buyers to complete the buying process without going to the dealership.

Participating dealerships will take you through the paperwork remotely and deliver a sanitized vehicle right to your home, all at a fair price. When using the Build & Buy Car Buying Service, accessed through the car model pages, you will find Buy From Home participants denoted by a special banner highlighting “Buy From Home: Have your vehicle delivered to you and complete your paperwork at home.”