The Complete Guide To Buying A Used Car: How To Negotiate Prices
So you've done your research, selected several makes and models of vehicles in your price range to test drive, test driven them and now you've narrowed your search for a used car down to just one vehicle. It's fun to drive, it's reliable and for the money it's about as close to perfect as you're going to get. Now the only thing you need to do is pay the seller for it and accelerate off into the sunset. Simple, right? Sure, as long as you don't mind overpaying. (If you're planning on going for a new model rather than a used, check out How To Negotiate A Great Price On A Car.)
The interesting thing about used vehicles is that their prices are anything but concrete. No matter what the seller is asking, you can almost always get away with paying less. This is because used cars don't have the same exclusivity as new cars. They've seen miles, they've been through rough seasons and most importantly – they depreciated in value the minute the original owner drove them off the lot. All of this adds up to leverage for the buyer. As a result, there is no reason to pay sticker price for a used vehicle.
Of course, it's easy to say that you won't pay sticker when you're reading this at home. Actually convincing your seller to accept a lower price is something else entirely. Though negotiating the price of a used car isn't difficult if you're buying through a private seller, it can be a daunting task if you're trying to talk down a dealership. If the latter applies to you, use this guide to help you stand your ground and successfully negotiate a lower price for your next car.
Determine How Much It's Worth
A used vehicle is only worth what someone is willing to pay for it. Consequently, the first step towards negotiating a lower price for your next used car is to figure out exactly what other consumers are paying for it. To do this, you simply need to consult the Kelly Blue Book.
For years, the Kelly Blue Book has been the premier index of used vehicle values. Simply enter your car's make, model, mileage and production year into the Blue Book's online search tool and you'll be able to see all you need to see to make a good valuation. The Blue Book lists how much the car is worth in various conditions, how much it sells for in your area and the lowest price a dealer should accept.
SEE: Master The Art Of Negotiation
If you want a second opinion, you can also visit Edmund's True Market Value calculator. Much like the Blue Book, the TMV provides you with the average selling price of a vehicle across a range of categories. In this case, you can see what you should expect to pay buying it certified pre-owned from a dealership, buying it non-certified from a dealership and buying it from a private seller.
Once you've determined how much your car-in-waiting is actually worth, set floor and ceiling offers to bring with you to the negotiating table. The floor offer is your initial offer and should be between 5-10% lower than the vehicle's average selling price. The ceiling offer is the absolute maximum that you're willing to pay to take it home.
Make an Offer
With your floor and ceiling offers ready, it's time to start negotiating. When you walk into a dealership, the sales agent will try a number of techniques to get you to loosen up your purse strings. They'll ask you how much you want to pay per month in order to hide the bottom line price. They'll ask for your maximum spending limit so that they can try to convince you to spend a few hundred dollars more. They'll do everything they can to make you commit to that sticker price.
Do not humor them. Don't answer any of their questions, especially the one about the spending limit. Politely tell them that you don't want to discuss financing right now. Show no interest, even if you're in love with the car.
Instead, ask salesperson to sit down. Present him or her with your floor offer and state that you're willing to take the car off the lot today if he or she can accept that price. Most likely, the salesperson will tell you that that they can't accept that price. That's fine, because they're not supposed to.
Make a Counteroffer
After turning down your floor offer, the sales agent will give you a list of reasons why the dealership deserves more money for the vehicle. Again, don't humor them. Politely explain that you know exactly what the vehicle is worth. Tell him or her that you've been to multiple dealerships over the past few weeks and can find a similar vehicle at all of them. You just happen to prefer this particular vehicle, and as a result are willing to let this dealership have the first shot at your business. If they don't want to play ball, that's fine. You can always take your money elsewhere. At this point, the sales agent will probably go consult his or her manager. After a few minutes, he or she will sit back down – perhaps accompanied by the manager – and present you with a counter offer that's slightly lower than the sticker price. The sales team will give you a hard sell on how this is as low as they can go and any lower would be ripping them off. In response, present the dealership with a counteroffer that's a few hundred dollars higher than your floor offer. List all of the flaws you found during your inspection and reiterate that you can always take your business elsewhere.
Wear Them Down Until You Win
At this point, you and the salesperson will be playing a game of who can wear down whom. The sales agent will keep slightly lowering his or her offer while you keep slightly raising yours until one of two things happens. In one instance, you'll meet in the middle and settle on a price that's roughly equal to the car's average value. If that's the case, then congratulations – you just purchased a car! In the other instance, you'll hit your ceiling offer.
If the dealership flat out refuses to accept your ceiling offer, then get up and walk away. It hurts, but you need to stand strong. Tell the salesperson that they just lost a sale and that you'll be going to the other dealerships to purchase a vehicle there. Ask the manager for his or her card, and write your number down on the back. Tell them that they can always call you if they change their minds. Then casually drive away. After a day or two, it's likely that the seller will call you back. A sale is a sale, after all, and it's better for them to get a car off the lot than it is to deny you the vehicle because you're undercutting the price. If they refuse, then go around to the other sellers in your area and repeat this process. Remember that negotiations are meant to be tedious. As long as you stay strong, you can be sure that you'll get your hands on a new vehicle eventually and at a price that's much fairer than what the dealerships would like you to pay. When you finally have a new set of keys in your pocket, you can move on to the final segment of our Used Vehicle Buying Guide – financing your ride.
A Note on Additional Services
When buying a used car through a dealer, you'll be forced to work with the dealerships finance and insurance officer to sign all of your paperwork. This person isn't a financial officer at all, but rather a highly trained salesperson who will try to sell you a number of additional services like an extended warranty, paint protection, gap coverage and more. Regardless of what they tell you, you don't need any of the services they offer. In most cases, you'd be wise to turn them down and simply buy the car like you originally intended. Additionally, if your dealer agreed to perform maintenance on the car before you take possession, make sure that this agreement is documented in a Due Bill.
SEE: 5 Ways To Buy A Used Car
A holacracy is a system of governance where members of a team ...
This law (Title VIII of the Civil Rights Act of 1968) forbids ...
A series of transactions that could have been treated as a single ...
A standard test applied to a process to determine if the net ...
Loans offered by the government to key business sectors.
The difference between the strike price of an option and the ...
Find out how to plan for retirement, target a standard of living and improve your financial situation once you've already ...
Learn about the role of each party in a reverse repurchase agreement transaction, and find out why it's different if the ...
Understand if a company can receive a tax credit from conducting research and development. Learn about the alternative simplified ...
Understand what research and development is and why a company or person would want to conduct it. Learn about how it can ...