Why January is a great time to buy a car — and how to pay for it

While December is often considered the best time to buy a car, the first month of the year means less competition and dealers who are even more desperate to offload last year’s models.  

This January is especially ripe for deals, according to Kelley Blue Book managing editor Sean Tucker, as dealerships are sitting on a surplus of most 2025 models.

With the exception of Hondas, Toyotas and Lexuses, “everybody pretty much has more cars in stock than they want,” Tucker told CNBC Select. 

“Dealers should be looking to discount,” he added. “They’re advertising the 2026s, but you’ll find the 2025 models on the lot.”

You can find a good price any time of the month, according to Tucker, as the cold weather and hefty holiday bills keep many people from car buying. Weekdays (especially Mondays) are particularly good for deals, with fewer shoppers to compete with.

Holidays mean auto sales, and Martin Luther King Jr. Day (Jan. 19, 2026) is the top holiday of the year for car deals, according to a report from comparison site iSeeCars. It found 65.5% more “good deals” on used vehicles than usual on MLK Day, outpacing even New Year’s Eve and New Year’s Day.

The study analyzed more than 40 million used-car sales from 2024 and 2025, defining a “good deal” as savings of at least 10%, or $2,689 off the average used-car price of $26,889.

Waiting until the end of January can give you an. edge when haggling with salespeople with monthly quotas. But don’t wait too long, or the inventory will be too sparse. 

If you’re financing your car purchase, put down as large a deposit as you can manage. According to the 20/4/10 rule, you should put 20% down on a 4-year loan and spend no more than 10% of your gross monthly income on all vehicle expenses — including loan payment, car insurance, fuel and maintenance. 

So if you make $85,000 a year, or about $7,083 a month, you shouldn’t be spending more than $708 a month on automotive costs, all in.

When crunching the numbers, Tucker says to focus on the total cost over the life of your loan.

 “Dealers will try to get you to shop by the monthly payment, but we tell people to pay far more attention to the long term — what you’re going to pay for that car with interest,” he added. “It’s too easy to get trapped into overpaying because you can afford the monthly payment.”

A $650 car note may seem doable, but over the course of 72 or even 84 months, it could add up to more than a year’s salary.

The first step in getting a car loan is to check your credit score. You can usually check your FICO Score for free through your bank or credit card issuer, or directly from FICO at myFICO.com.

Anything below a 620 is considered subprime, which means you’ll face higher rates, need a bigger down payment or even have to get a co-signer. A score of 660 or better (prime/good) will earn you a favorable rate, while 780+ (super prime) should secure the top offers.

Armed with your credit score, your budget and some personal details (like your Social Security number and proof of income), begin to shop for the best rate and term.

A low APR is always the goal, but be on the lookout for origination and application fees, as well as other up-front charges. See if you can negotiate to get them lowered or waived before you sign. 

Your term length will also have a big impact on how much you pay in the long run. Since they pose less risk, short-term loans tend to have lower APRs.

Be sure to compare any offer you get from a dealership with those from banks, credit unions and online marketplaces.

One of our top picks is Capital One, which combines competitive rates and minimal fees. You can shop for new and used vehicles at hundreds of participating dealerships with its online Auto Navigator tool.

If you don’t have terrific credit, MyAutoloan can find financing for borrowers with scores as low as 600 and works with co-signers. Complete the form and you’ll get up to four prequalified loan offers.

At CNBC Select, we work with experts who have specialized knowledge and authority, backed by relevant training and experience. For this article, we interviewed Sean Tucker, managing editor for compact and full-size vehicles at Kelley Blue Book.

Sean has covered the automotive industry for over 25 years and has appeared in The Washington Post, U.S. News and World Report, CNN and the BBC. 

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice to help them make informed financial decisions. Every auto loan guide is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.