The term, clearance sale, as it applies to car sales and leases, refers to the end-of-model-year sales conducted by car dealers to help sell (or lease) remaining current-year inventory of vehicles. Dealers don’t want to be caught with too many of the old models when new models begin arriving.

Car clearance sales are often held as much as three months ahead of new model arrivals. Or, if dealers still have significant old-model inventory after new models are already on his lot, he can hold late clearance sales to help move the “old” vehicles out.

These sales usually offer good buys and leases because they are typically subsidized by the car manufacturer. Manufacturers offer incentives to make the deals extra attractive. These incentives can come in the form of cash-back rebates, low-interest loans, 0% APR loans, and special lease deals. Dealers usually kick in their own price discounts, often supported by hidden factory-to-dealer cash, part or all of which can be passed to customers.

Customers who are considering attending such clearance sales should do some homework first. If interested in a particular make and model, go to the manufacturer’s web site and look for “current offers” or “local offers” under the “Shopping” section of the site.

Be aware that clearance sales don’t always include every model and style vehicle, although a dealer might want you to think so. In extreme cases, there may only be good deals on a couple of vehicles but the dealer wants to get you into his showroom in hopes of selling (or leasing) you any vehicle — even if it doesn’t have incentives or special deals. A little common sense and mild caution never hurts when attending these “events.”