How to Negotiate the Price of a Used Car
How to negotiate the price of a used car.
(See Part One of this two-part series, titled Used Car Buying Guide.)
The reason this tip appears as it’s own blog post is that hopefully by now after having read the first part of this series, this should all paint a picture of preparation. You should walk into the dealership armed with a lot of information and have a pretty solid idea of exactly what you want and how much you can pay for it. You may still have to test drive a few different cars to find one that suits you perfectly, but you should never be going in blind.
The trick to successfully negotiating the price of a used car is patience. There are thousands of cars out there in a given area, there’s no reason to jump at the first one you find for sale if you’re not desperate. Sites like Ebay Motors, Cars.com, Autotrader.com and Craigslist.org will give you plenty of options. Research these sites to find out approximately how much the cars you’re interested in are going for. This gives you not only options, but leverage when it comes to negotiating the price of the car.
When researching, pay attention to a few different attributes. Note how the number of miles on the car affects the selling price. It terms of longevity, there isn’t much of a difference between a car with 80,000 miles and another car the same year with 100,000 miles. You might be able to get a car considerably cheaper if you’re willing to tolerate a few more miles on the odometer.
Google is Your Friend
Run a Google search on the VIN of the car you’re interested in. Just copy the VIN from the ad, paste it in and press ‘Enter’. This will tell you a few things – most notably the number of different sites the car is listed for sale on. See if the price is consistent across all the sites. If there are variations, print the ad of the car with the lowest price and begin negotiating from there. If the car has been listed multiple times on Craigslist in different markets, it is possible they will all show up. The datestamp on the ads will let you know how long the car has been for sale as well. Dealers are generally more apt to barter on cars that have been on their lot for a while.
Don’t be afraid to walk away from a deal or three. If something doesn’t feel right, or doesn’t suit you or your budget perfectly, there will always be another opportunity. And by all means necessary leave emotion out if it. Negotiating the price or a car is a business transaction, nothing more, nothing less. The salesperson’s job is to get you to pay the most money possible, while your job as the buyer is to pay the least.
The ‘If/Then’ Statement
When it comes to actually asking the salesperson to lower the price, you will get resistance. You will get a line that sounds like ‘this car is already priced very aggressively’. They are hoping that this will be the last time you ask. Many people will tell you to ask the salesperson if they can ‘do better’, or what their ‘best price’ is. This is bad advice because it is all based on speculation. Instead, say something to the effect of “if you can sell me this car for $xx,xxx including tax and title I will sign a purchase agreement right now.“ What this tells the salesperson is that you are serious, and by wording it this way you are giving the salesperson a means to a sale. He can go to his manager and say, ‘can I sell this car for this much?‘ Instead of saying ‘how low can I go‘? ‘If/Then’ statements tend to be much more powerful in a negotiation.
In the case of my recent transaction, He had already discounted the price of the car a little and made a fair offer for my trade-in. Despite this, we were still about $1,000 apart on where I needed to be. Cutting right to the chase, I said to the owner of the car lot, ‘I have X amount of cash and I am looking for X amount for my trade in. If you can sell me the car for that amount, great. If not, I understand.’ He punched some numbers into his computer and came back with a figure that was about $200 over the amount I’d just proposed. I agreed to the new terms and left there with a nice new (to me) automobile. Which when you consider everything, was about 20% below the original asking price and he gave me full value for my trade.
Final Thought: The Likeability Factor.
Used car sales people are people. While the gist of the transaction appears to be adversarial in nature, it doesn’t have to be approached that way. The fact of the matter is, if you look at the whole thing from their point of view, it is easier to understand their motivations and negotiate a good price on the used car you want to purchase. The reality is that the car lot or dealership is a for-profit organization, and they are entitled to a profit if they do indeed sell you a car.
Another thing to take into consideration is that right now, the used car market is extremely competitive. Their profits are down due to the lower mark-ups they have to take. Furthermore, overall inventory is in lower supply due to the fact that people are keeping their cars longer – a trend that experts predict will continue for some time.
If you know what you want and what you’re able to pay, having that all sorted out simplifies the process considerably. For instance, I’d researched everything that was important to me – from reliability to resale value – to the point that I knew exactly what I wanted. I found a lot with a suitable car for the price I was looking to pay. This took all the guesswork out of the deal from the salesperson’s perspective – there was no ‘selling’ to be done. I test drove the car and took it to an independent shop to check it out. When everything came back as acceptable, it was on to the negotiation round.
The reason I was as successful as I was in negotiating the price was the fact that both the owner of the lot, and the salesperson liked me. We talked business and about family and such – I was selling myself to him as much as he was to me. They were straight with me and I with them – I didn’t try to lowball them to the point of bankruptcy but I know for a fact that I chipped into their profit margin quite a bit when all was said and done. After the sale was completed, the owner told me he had another buyer lined up for the same car who was waiting on financing and yet despite this, he still gave me a very fair deal for both my trade-in and the car I bought.