Calculating what to pay for a used car is a little more in depth than figuring a new car offer. You must figure what you want to pay to effectively negotiate the used car's price with the dealer or individual selling the vehicle.
Each pre-owned vehicle is different and stands on its own depending on the age, mileage, popularity and condition. Used cars do not have a factory invoice and don't use invoice pricing so this makes it a little trickier on where to start the negotiation process.
You don't want to start negotiating a used car's price by just blurting out numbers in hopes the seller will discount the price. Researching the market and estimating the true value of the vehicle will give you the upper hand and make sure you pay a fair price.
Locking yourself down to a specific used car that's hard to find will put you at a serious disadvantage when it comes time to negotiate price. My advice is to decide on the type of car you like and then have a couple other vehicles you wouldn't mind owning as backups.
There are basically two ways to purchase a used car, from a dealership or a private seller. In this section I'll teach you a few effective negotiating strategies for both and some general tactics you can use to guarantee you get the best possible deal.
Used Car Negotiation Tactics
The following tactics apply to both negotiating with a dealership or private seller. Completing these steps will give you the upper hand when time to discuss the price of the car. Use these negotiation tactics and read my section on how to buy a used car to make sure you get the best possible deal on your next vehicle.
Don't be Afraid to Walk Away
This is the best piece of advice during the negotiation process. Don't get attached to the car, be flexible in your choices, keep your emotions in check and be ready to walk away if something doesn't feel right or not going your way. I promise you, the manufacturers will make more cars, there will be many other vehicles to choose from.
Be a Polite and Respectful Negotiator
There's plenty of advice on the Internet telling you to walk into a dealership with guns-a-blazing saying things like "that's my offer, take it or leave it" or "you better do this price or I'm walking!" This is very bad advice and salespeople tend to stand their ground and not want to do business with you.
Don't be rude, obnoxious or demanding with a dealership or private seller. The last thing you want them to do is become aggressive or standoffish. Be polite and respectful as you expect them to be with you. Remember you can catch more flies with honey than vinegar.
Check the Vehicle's History Report
Before you begin negotiating the price, if you haven't already done so, check a vehicle's title history before moving forward. Not only will it tell you information about the vehicle's past, it can provide you with powerful information you can use to negotiate the price of the car.
This step will keep you from wasting time on a vehicle that may have previously been in a major collision or have a salvaged or rebuilt title. I recommend you acquire your own vehicle history report from an online company such as AutoCheck and not rely on anything a dealer may provide you.
Visually Inspect the Vehicle
A very powerful technique dealers use to devalue a vehicle is called a "Silent Walk Around." This technique helps you to mentally devalue the vehicle in seller's mind. Don't show any emotion and don't speak as you walk around the car.
Touch or point out every door ding, scratch, stain and flaw on the vehicle, occasionally shaking your head. The seller may start to explain or make excuses for what you notice, just keep as silent as possible and continue the process.
Take notes, this gives the impression you're comparing the vehicle with other vehicles you're considering.
Ask the seller these questions:
- How many miles are on the tires?
- When is the last time the brakes where changed?
- What grade of fuel do you put in the vehicle?
Look under the vehicle, is there fresh oil or fluid on the ground where it's been parked? Open the hood and check the cleanliness of the engine department. Check all the fluid levels and make sure they're not black or gritty. Use a flashlight and check for any leaks down the side of the engine or look for splatter marks on the underneath side of the hood.
To learn more on what to look for when inspecting a used car. Read my section on how to avoid buying a flood damaged vehicle, it has many tips and tricks on what to look for when looking at a vehicle. Write down anything you find while inpecting the car, you can use this information when discussing price with the seller.
Test Drive the Car Before Buying It
I wish I had a dime for every time someone told me "they didn't want to drive the car" or "I don't need to drive it, I drove one just like it down the street." I know the salesperson wants you to drive the car so you fall in love with it but you're smarter than that. Take the time to properly test drive a used car before you buy it.
You should always test drive the exact vehicle you want to buy before committing anything. If the person you're negotiating with, or you're unable to test drive a vehicle before buying it, don't buy the car and walk away!
Open and shut all the doors, make sure they're solid and you don't hear loose glass inside the door. If you do, the vehicle may have been in an accident. Look at the creases between the quarter panels, hood and trunk lid. Make sure they are straight and evenly aligned. This is another tell-tale sign the vehicle may have been in a fender bender.
Get in the car and turn it on, take a minute to adjust the mirrors, seat, etc. just the way you would in your car. This allows you to test and operate all the buttons and switches. Check the A/C and heater, wait for the A/C motor to come on and listen for grinding. Turn on the radio, test the volume and use the balance/fade switch to check the speakers for cracking. Don't forget to check the CD player and DVD player if applicable. Open the sunroof and make sure it shuts correctly. Make sure all the seatbelts work properly
After you've checked all the bells and whistles on the vehicle take it for a nice long test drive. Check the brakes as soon as possible before getting out on main roads. Give the vehicle time to warm up and drive it on as many driving scenarios as possible, highway, main roads, stop and go traffic, rough roads, gravel, etc.
If you have the radio on, turn it down low so you can listen to the vehicle. The vehicle should shift smooth and not jump or jerk. Check the vehicles alignment, preferably on a nice long bridge to see if it pulls to the left or right. Pull up to a shopping center where you can see the reflection and check headlights, brake lights, reverse lights and turn signals.
Used Car Buying Tip - The test drive is the time a salesperson will use to build report with you. Salespeople are trained to talk about anything but the vehicle when on a test drive. They do this to divert your attention from the vehicle. If they attempt to make conversation with you and you don't want to talk, politely ask them to let you listen to the vehicle.
How to Negotiate a Used Car's Price
The price you see in the ad is just where the seller wants to start the negotiating process. Your initial offer should be a little lower than what the current market value of the vehicle is. To present a reasonable offer you must gather as much information as you can about the car you want to buy.
When you're researching this information make sure you're comparing apples-to-apples, inputting the correct mileage and adding the correct trim and options. Get as close as you can and then make your own adjustments from there.
Online used car buying sites are a great place to gather used car pricing information. The free quotes you request can be used in your negotiation process.
Another good place to gather vehicle price data is eBay's recently sold vehicles. To get accurate data make sure you're looking at vehicles sold in your local area within the last few weeks.
A very powerful negotiating strategy is by going to used car listing sites and request a few free used car quotes from different local dealers on the vehicle you want to buy. Keep the lowest ones and take them with you to negotiate a better price. This strategy will work with both dealers and private sellers.
Negotiate a Used Car with a Private Seller
Once you find a vehicle you would like to buy from a private seller. The first thing you want to do is get the vehicle identification number (VIN) so you can review the vehicle's history. This will keep you from wasting your time trying to buy a car with a serious discrepancy.
I recommend using a company such as AutoCheck to get a report. It may cost you a little extra money, however it could save you thousands in the long run. Read my complete section on used car history reports to see why I recommend them over the competition.
When making contact with a private seller be polite and ask a lot of questions. This will give you an advantage when you start the negotiate process later. If you don't feel good about an answer you can cross the vehicle off your list. Ask these types of questions:
- Who's name is the car titled in?
- Why are you selling the car?
- How long has the vehicle been for sale?
- How many miles on the car?
- What was the vehicle used for?
- Do you have the maintenance records?
- Did you buy the car new?
- How is the overall condition?
- Does everything work?
- Does the A/C and heater work?
- Has the car ever been wrecked or painted?
The Silent Walk Around
This is where the "Silent Walk Around" comes into play as I explained in the general topics above. Keep silent and don't show any emotion while inspecting the vehicle. Touch any discrepancies and shake your head in disappointment. The seller will automatically think you're not happy with the vehicle and work to your advantage.
Make sure you have your driver's license and current insurance with you so you can test drive the vehicle. Ask the seller and take note about anything unusual that comes up during the drive.
How to Discuss Price With a Private Seller
If you like the car and want to make an offer ask the seller this question first:
"What is the least amount of money you would take for the car right now?"
By asking the above question, a desperate seller may drop the price significantly from what they were asking before beginning the negotiating process. Your initial offer should be less than the maximum price you'll pay and it may still be far less than what the seller is still asking for the vehicle.
Don't shoot all you bullets at once, negotiation is a give and take, back and forth process. Every time you counter, you should bring up discrepancies on the vehicle or what others are asking for the same vehicle in the local market. After devaluing the vehicle, raise your offer a little, you can keep doing this until the seller agrees to your offer or until you hit your maximum price.
If the seller is not flexible with pricing, feel free to show them some of the local quotes you've received from Car Clearance Deals, Edmunds and CarsDirect for proof he is asking too much for his vehicle. If you can't come to an agreement, give the seller your contact information, be polite and walk away.
Before money exchanges hands, ask the seller if he is okay with you taking the vehicle to a mechanic of your choice to inspect the vehicle to make sure it's a reliable. If the seller refuses, they may not be being honest with you about something.
Negotiate a Used Car with a Dealership
Dealers and their staff are professional negotiators. It's very important you gather as much pricing information as you can find on the vehicle you want to buy. Depending on how long a vehicle has been sitting on their lot, most used cars have anywhere from 10-25% marked-up in the asking price of the vehicle.
Negotiate With Dealers By Phone or Online
Negotiating by email or phone keeps you in control. If a dealer promises you something over the phone, have them put it in writing by asking them to send you a quick text or email.
A dealer will always attempt to get you to come in to the dealership. They know they have a better chance of selling you a car at a higher price if they get you to come to the dealership, rather than trying to sell you a car over the phone.
It's okay to look at cars at a dealership, just don't start the negotiation process. If you go to a dealership, let the salesman that approaches you know you're not buying a car today, you're just gathering information.
Get Price Quotes From Multiple Dealerships
While shopping for a vehicle, don't be surprised to see similar vehicles priced high and low. This just means there's more wiggle room to negotiate with the higher priced cars. Normally a dealership will price a vehicle they just received higher in the market. The lower priced vehicles may not have as much wiggle room, it really depends on the pricing model of the dealership
Don't let these high advertised prices discourage you, this is just where they want to start the negotiation process. You want to buy the car at or below the current market value. No matter what the asking price is, I recommend you request quotes from the dealer.
Use online used car listing sites we recommend such as Car Clearance Deals, Edmunds and CarsDirect to get as many quotes as possible on the particular vehicle you want to buy. Make sure you compare apples-to-apples and keep the mileage range as close as possible.
Let them know you're interested in the vehicle and will be buying a car in the next few days. Ask them to send you their best price on the vehicle you're inquiring about.
Play Dealers Against Each Other
Once you receive your quotes, you can use them to negotiate between dealers to get a lower price. You can do this by phone or email, this is how it works:
- You receive 5 quotes from dealers all on the same car with a range of about 10k miles.
- ABC Motors gave you the lowest price quote of $11,000 for a vehicle with 40,000 miles.
- XYZ Motors sent you a quote for $12,500 for a similar car.
- You want to get XYZ Motors to discount their price to be more competitive with ABC Motors.
- Contact XYZ Motors and give them a chance to discount the price of their car.
You'll do this with all the higher quotes you receive, I recommend you start with the vehicles that have the highest prices first. It's okay to let the dealers know the price and mileage on the lowest quoted vehicle. This will give them an opportunity to decide on how aggressive they can be on matching or beating the other dealers price.
When you send them the information, make sure you let them know you're ready to buy a car NOW. Dealers will be more aggressive on discounting the price if they know they have someone who is willing to purchase right away.
Keep playing them off each other, if a dealer discounts their car lower than the lowest price you have, they become the front runner. Make sure you contact the dealer that had the lowest price first to give them a chance to play.
Once the dealer stops responding or refuses to discount the vehicle further, you'll know they've discounted the vehicle as far as they can.
Once you're at this point, you should have several vehicles to choose from. Before running off to the dealership, go for one last discount. Contact the dealership and tell them you will come in and buy the car right now if they will discount it another $389. This is an odd number and they may or may not discount the vehicle anymore but if you don't ask, you don't receive.
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