Estimate Dealer's Cost on any Used Car

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How to Estimate Dealer's Cost on any Used Car | Used Car Buyer's Guide

Used car buying tips in this section:

Use our used car buyer's guide combined with the Best Time to Buy a New or Used Car to maximize your savings.

Do Used Cars Have an Invoice like New Cars?

Used Car Buyer's Guide - Step 1 - Used cars do not have an invoice like new cars from the manufacturer. They do have an internal cost sheet that allows the dealer's management to tell exactly how much they have put into a vehicle.

This makes it a little more difficult for the car buyer to determine what the true cost is on a used car. You can never tell if the car dealer bought the car cheap (well under wholesale or market value) or actually overpaid for the vehicle.

A car dealer will buy a car at auction, or take a car in on trade at a certain amount or cost, also known as (ACV) Actual Cash Value. Then the car dealer will have certain reconditioning fees on the vehicle. These added costs vary on each car depending on what had to be done to the vehicle in order to allow the car to be put on the lot to be sold.

Used Car Reconditioning Fees - Reconditioning fees are costs incurred to restore the vehicle back to presentable condition. Reconditioning could be repairs, bodywork, touch-up, tires, oil change, detail, etc. Some vehicles may only have minor reconditioning and some may have major reconditioning fees attached to them, it all depends on the work that was done on the car.

On top of reconditioning fees, a dealer may add a "Pack" to the vehicle also. Pack is a negotiable item and can be anywhere from $250-$750, although it may be very hard to negotiate at some dealerships. Pack is added to every car to help pay the operating costs of the dealership, and a salesperson is not paid commission on this amount.

How to Get Free No-Obligation Used Car Quotes Online

Use an online automotive research and review company such as Yahoo Autos, TrueCar or CarsDirect to find and research used cars that interest you.

Go to each site above and request a free used car price quote on the vehicle you're wanting to buy. You can use these price quotes to compare how much a dealer is willing to discount a used car to what you've estimated the cost to be. You can also use the contact information you'll receive to play the dealers back and forth until the last man standing. Once a dealer stops replying to you, you'll know he's at his bottom dollar of what they'll sale you the car for.

Used Car Manager's Used Car Cost Sheet Example

Most used car departments keep a used car book behind the desk. It contains all the used vehicles on the lot, normally set up by make. Each vehicle has its own sheet, all used car departments are different and many keep them on the computer today. Each sheet contains a breakdown by cost of everything that's been done to the vehicle. Below is an example of a car that didn't need much reconditioning.

Used Car Cost Sheet Example

$8,300.00
=
Vehicle cost (Can be higher or lower than market value depending on how well negotiated at purchase)
$250.00
=
U.C.I. (Used Car Inspection performed by dealer before a used car is put out for sale)
$300.00
=
Windshield replaced
$150.00
=
Broken console repaired
$110.00
=
Detail
$9,110.00
=
Total Dealer Cost

Other outside factors that may affect a used car's cost.

Factors other than the condition and miles of a used car will cause the cost of a vehicle to fluctuate up or down, including

Overall, most car dealerships average cost on a used car is just below the listed wholesale price of the vehicle. Buying a reliable and dependable used car below or close to the listed wholesale value is considered a very good deal when it comes to buying a used car.

Estimate a Car Dealer's Cost on any Used Vehicle

Once you've picked out the used car you would like to buy. Write down all the specifics of the vehicle such as the year, make, model, trim, miles, and options. You will use this information to help estimate what a dealer may have paid for the vehicle.

You now want to appraise the car just like you would do if you were determining the value of your own car before trading it in. The appraisal tool I recommend is Edmunds.com's appraisal tool. Their tool tends to be closer to what the actual used car market is in your area at any given time.

After entering the car's information into Edmunds.com's appraisal tool, you will be given three different amounts:

Trade-in - What you can expect when trading in your car with a car dealer in your area.

Private Party Sale - What to expect if you sell or buy a car through a Private Party Sale.

Dealer Retail - The price others are paying car dealer's for the car. Normally higher than Private Party Sales.

The trade-in amount is the one you're interested in. The trade-in amount will be the closest estimate to the dealer's original cost on the vehicle you're looking to buy. Even though a car dealer will add more cost to a car before making it available for sale to the public they will try to keep their costs down to a minimum.

When entering the information of the car you want to get an estimate on into the Edmunds.com's appraisal tool. You will have to choose the vehicle's overall condition. Your choices will be outstanding, clean, average, rough, and damaged.

If you're looking at a used car from a reputable dealer you should choose the condition as "average" to get the most reliable number to start with. This number should be a good estimate of the total money the dealer has in the car including any reconditioning charges he may have incurred.

After entering all the information and choosing "average" as the condition. Write down all three prices, trade-in, private party sale, and dealer retail. Your goal is to purchase the car below or as close as possible to the trade-in value. This will give you a very good starting position when negotiating and buying your next used car.

Search Free Online Classifieds

Doing research using online automobile classifieds is a good way to determine what a certain type of vehicle is going for at any given time. Free classified advertising sites such as CarsDirect and AutoTrader will let you search within your local area to determine what car dealers and private parties are asking for their vehicles.

When car dealers advertise prices online, they're normally priced with very little profit built into the price. They know they're competing with other dealerships and private parties to get your business. You should always take the time to price the vehicle yourself through an Appraisal Tool to get the most accurate pricing amounts.

Enter the vehicle your looking to buy into Yahoo Autos and TrueCar, and request a free dealer quote on them. Once you receive the quotes, compare the prices you receive with what you've estimated above to be the dealer's true cost. This will give you somewhat of an idea of how much mark-up is in the vehicle, remember it's only a guesstimate.

Carefully read tricky classified advertisements.

When you skim through classified ads, it's easy to miss something and focus on just the price. Car dealers are very good at writing classified advertisements, leaving the negative aspects out of an ad and focusing on the positives of the car.

Let's say you're looking for a certain car and there are 5 of them listed on TrueCar. They're all the same year, make, model, and trim, and they're all priced in the neighborhood of $15,000, but there's one that's priced at only $13,500. Why is this car $1,500 cheaper than the others? Are the miles listed in the ad, or are they conveniently left out? Is the vehicle missing a certain option, or is it a different trim? The dealer may have just been able to steal it from the person that traded it in. This is why you need to be careful when looking at ads, just remember, "If it seems too good to be true, it probably is".

Before contacting the Seller, check the used car's history.

Before you fall in love with a vehicle you find advertised online, you should run a vehicle history report on the car. We recommend CARFAX. They give you the option to run an unlimited amount of reports for up to 30 days.

You can read more about vehicle history reports, how they protect you, and why they're such an important part of the used car buying process here - All About Used Car History Reports.

Most online classified advertising sites will give you the option to purchase a vehicle history report on the page of the advertisement. However, if the vehicle comes back dirty or your comparing several cars, you don't have to purchase each report separately. You can go through CARFAX and run as many reports as you want, knowing personally where you got the information.

By checking the used car's history report up front you will also not be wasting your time inquiring about a vehicle that you've found to be unsatisfactory. If the vehicle does not have a VIN posted on the advertisement, contact the seller and ask them for it. The example contact email below shows you what other questions to ask a seller when contacting them about a used car.

Contact the Seller through email.

Once you find the vehicle you would like to buy. You will now want to contact the dealer selling the car. If you're going through TrueCar, CarsDirect, or AutoTrader you can get the seller's contact information and email address and send them a personal email.

Here's an example of how to contact a dealer about a used car. You may use all or part of the following email:

---------------------------------------------------

Dear [Contact's Name],

I'm buying a car within a week. I do not have a trade and
I will be paying cash. Please contact by email only.

I'm shopping several dealerships to find the best value for the money.

I would like more information on your [Vehicle listed in ad]
for sale. Please send me the following information.

Year -
Make -
Model -
Trim -
Exact Miles -
VIN -
Sales Price -
[Anything else you may want to know about the vehicle}

[Additional comments if any]

I would also like to know what your drive out price
offer would be for me to purchase the vehicle
including any dealer added fees. (not including tax, title, and license.

Thank you,
[Your First Name]
[Your Email Address]

---------------------------------------------------

Use this email to contact any dealer that has the car you're looking to buy. You will be surprised how many dealers will actually send you a lower price than what is advertised on the ad.

More than one dealer responds to back to you.

If you have more than one dealer respond to you, now you can play them off of one another to get a lower price. Use your lowest price quote and contact the other dealer to see if he can beat it. Keep going back and forth until they stop responding. You will then know you have received their lowest price.

Dealer responds and the price quoted is reasonable.

Once the dealer sends you a price, compare it to what you estimated the dealer's cost to be earlier. If you're happy with the price move on to Step 2 of my Used Car Buyer's Guide - How to Get a Low APR Used Car Loan.

Car Buying Tip - Remember, there is no way for you to tell exactly how much money a car dealer has in any particular used car, or what they had to spend to recondition the vehicle before making it available for sale.

The best way to be protected from overpaying for a used car is by doing the research and negotiate the price as close to the trade-in value as possible.

The Truth About Free Online New Car Price Services

Used Car Buyer's Guide Step-By-Step Index

- Step 1 - Estimate Dealer's Cost on Any Used Car - Optional - Get an Extended Auto Warranty up to 60% Off Retail
- Step 2 - Get a Low APR Used Car Loan Online - Optional - Estimate Your Trade-in's Value
- Step 3 - Negotiate and Buy Your Used Car

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Back to Used Car Buying Tips | Quick Used Car Buyer's Guide | Step 1 - Estimate Any Used Car's Cost

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