10 Tips on How to Negotiate Used Car Prices
March 30, 2022
Buying a used car is a big expense. You want to make sure you get the best for your money, so it’s important to make sure you do it right. Negotiating with car salespeople is an inevitable aspect of buying a used car, but also a very daunting one.
Many people don’t know how to ask a dealer to lower the price on a used car because we often assume that the sticker price is the final word. However, there are a lot of variables that figure into the price of a car. A little research and footwork can give you a position of strength in a negotiation for a used car. Knowing what tricks to avoid can save you money on your car purchase.
Why Buy Used?
The main reason to buy a used car is depreciation. A brand new car loses a significant amount of value when it is driven off the lot. Used cars give buyers on a budget a way to get the latest models without all the costs.
Used cars have a lot of variables that affect negotiations. Dealers have a lot of leeway in what they can charge for a used car. That means they also have a lot more room to negotiate than when selling used cars, because there’s no Manufacturer’s Recommended Sticker Price (MSRP) setting a guideline for the price of the vehicle.
What Should You Do When Trying to Negotiate?
Although most negotiations will probably take place in the showroom, you might also find yourself negotiating by phone, email, or text message. Sometimes negotiations take days or weeks, so it is important to leave your contact information with any prospective seller.
In all negotiations, there are several things you can do to strengthen your position before you even begin.
- Research and Test Drive
When you walk into the dealership, you should have an idea of what kind of cars they sell, what kind of car you want, and what cars are in your price range. Research can be done online on sites like Edmunds or Kelley Blue Book, and you can compare prices to dealers’ websites.
- Get Vehicle Histories
Every used car has a story. Knowing a car’s history can help you leverage the price. Car histories can be obtained from sources like AutoCheck or CarFax, and can tell you if the car has had significant repairs. You can use a vehicle’s history in your negotiations with a dealer or seller.
- Compare Prices
It is important to shop around as many dealers as you can. Having a variety of prices available on the same vehicle can give you leverage in your negotiations. It should also give you an estimate of what any features should cost, especially if they’ve been added by the dealer.
Insurance and financing costs are also important to know ahead of time, because they give you insight on what you are ultimately going to pay. You can use these costs to figure out your budget and how much car you can afford, giving you a firm foundation from which to begin your negotiations.
- Look for Prequalification and Preapproval Deals
When you walk into a dealership with financing, this gives you a lot of leverage. It shows that you not only know what you’re paying for, but that you already have the means of doing so. Dealers often have their own financing packages, but they often start at higher rates. Lending institutions have lower rates, and many dealers will lower their own rates to compete.
- Consider Your Trade-In Value
If you are trading in a car as part of your purchase, you have another large piece of leverage in a negotiation. In your research, you should also familiarize yourself with the value of your trade-in and what you can reasonably expect to get back.
- Determine Your Budget Range
Once you’ve factored in financing and trade-ins and familiarize yourself with the price of your car, it’s time to determine the range you will be willing to accept. This should be the total price of the car, and you should keep all negotiations within this metric. When you start your bidding, you will start on the low end of this spectrum, which should be within reason and backed up by your research and other assets.
- Know Your Soft Skills
How you talk to people and read their body language is known in commerce as “soft skills.” These are important in the negotiation process, and you can bet that skilled salespeople are using them on you. A few soft skills that are important in negotiating the price of a car include:
- Confidence – it’s important to act with self-assurance, especially when you’ve done your research. A lack of confidence could be used to wear you down.
- Strategy – a negotiation is like a chess game, and knowing how you’re going to proceed and adapt within the negotiation ahead of time will help you spot opportunities, as well as avoid being taken advantage of.
- Avoid being pushy or too agreeable – when you’re too agreeable, salespeople might not give you the best deal you can get. However, don’t overcompensate by being too pushy, as this also betrays a lack of confidence that will be pounced on in a negotiation.
- Patience – the negotiation may take hours, days, or even weeks. Be ready for the long haul.
- Persistence – Part of the negotiation is to wear down your resolve. Make this harder for them by being ready for it. When you visit the dealership, make sure you’re prepared for a long day by bringing snacks and eating beforehand.
- Observant – pay attention to cues from salespeople, sticker prices, the sales manager, and everything around you. Your visit to the dealership is also research, as it gives you an idea how the dealership runs and which salespeople are most in need of closing a deal.
- Don’t be bullied or fall for tricks – some salespeople will try to intimidate or rush you into a purchase. Others will try to obscure the price of the car in monthly payments on a theoretical loan. Stay the course and focus on the negotiation, or leave if you feel uncomfortable.
- Timing Is Everything
When you buy your car can also affect your leverage in a negotiation. Cars are often in high demand around tax season and at the end of the year, which means prices will be harder for you to negotiate. Your location might make buying a car easier during certain times of year, which will also give more leverage to the dealer. However, dealers also have monthly, quarterly, and yearly quotas, and they want to make sales to meet them.
- Have an Array of Options
Sometimes, you will find that no matter what you do, a dealer will not negotiate or will not work within your limits. It’s easy to get attached to one make or model, but it’s important to be flexible in your search. You might test drive your favorite make only to find that another similar style is better, and you may be able to find the make you like at a different dealership. You can’t be afraid to walk away from a negotiation that isn’t going your way, even if it’s the car you have your heart set on.
- Get It in Writing
To ensure you’re getting the deal you think you are, ask for something in writing. This will come from the dealership’s Finance and Insurance (F&I) office, and should include everything, from the price of the car to any features or add-ons the dealer might include. Buyers don’t have to accept many of these add-ons because often they can be found elsewhere for less money, so it is important to ensure you aren’t paying for something you do not need. Make sure you read all documents from the F&I office carefully before you sign. If you don’t leave with documentation of your deal, it’s still only a verbal agreement.
Negotiating with Private Sellers
When you’re buying a car from another individual, there are other considerations to the negotiation. Often, a private seller is either motivated to sell the car quickly or there is sentimental value attached to the vehicle. This means that your soft skills are even more important.
Private sellers might also have loans on the vehicle, but they don’t have as many overhead costs as a dealer will have. This makes the value of the car even more important as a starting point for your negotiation. You can also include having the car looked over by a mechanic in your negotiation, as any issues can be used to lower the price.
Buying Your Car
Salespeople spend years learning negotiation skills, and use these skills every day. Most people only make large purchases like a vehicle every few years. Being out of practice is to be expected, but it’s important to refresh your negotiation skills periodically, especially when it’s time to buy a new-to-you car.