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How to Negotiate Prices

  1. Introduction
  2. What to Look for in a Used Car
  3. The Inspection and Test Drive
  4. How to Negotiate Prices
  5. How to Finance a Used Vehicle
  6. Conclusion

After you’ve done the hard work of researching the makes and models of vehicles that are in your price range and taking them for a test spin, you likely have a firm idea of which car you want to buy. Now comes the real challenge: negotiating the purchase price.

Here’s where your bargaining skills come into play. Simply accepting the dealer’s sticker price as the lowest price possible is a good way to give yourself a case of buyer’s remorse. Unlike a new car, which may have never been driven past the dealer’s lot, a used car has been on the road and as a result, it’s already lost some of its value. (See: Cars That Depreciate the Least.)

Consider this example. According to data from Edmunds, an average midsize sedan with a sale price of $27,660 loses $7,419 in value in the very first year. In its second year, that same car loses just $1,114 in value. Between the second and fourth years of its life cycle, it depreciates by $5,976, which is less than the total amount of depreciation incurred in the first year. 

The takeaway? When you buy a car that’s already a year or two old, it’s likely to have experienced its biggest value drop already. That gives you as the buyer some leverage in terms of getting the dealer to cut you a better deal on price. (See: How to Negotiate a Great Price on a Car.)

How Much Can You Talk a Dealer Down on a Used Car?

This is the central question that you should be considering when you’re planning to buy a used car and there’s no one-size-fits-all answer. The amount you can knock off the price ultimately depends on what the car is worth, how strong your financing position is and how long the car has been on the lot. Here are some things to keep in mind as you open negotiations.

1. Determine the Car’s Value

A general rule to remember is that a used car is really only worth what a buyer is willing to pay for it. The dealer may be asking $20,000 but if it's willing to accept $15,000 because you refuse to budge on the price, that’s a better indicator of its value.

That doesn’t mean, however, that you can just throw out any number when attempting to negotiate with a dealer. You need a framework within which to shape your offer. There are a couple of different ways you can approach getting an accurate estimate of a used car’s value. The first is finding out what Kelly Blue Book (KBB) has to say.

Kelly Blue book is one of the most well-known indexes of new and used vehicle values. To find out what a particular car is worth, you simply plug in the make, model, mileage and production year into KBB.com. Kelly Blue Book can tell you how much a used car is worth in “excellent” versus “fair” condition, how much similar vehicles sell for your in your area and the lowest price a dealer is likely to be willing to accept.

Edmunds.com can be another valuable resource for determining how much a used car is worth. You can use the True Market Value calculator to get an idea of the vehicle’s average selling price. The calculator uses actual car sales in your area to estimate an appraisal price. You can see how  much you could expect the car to cost if you’re buying from a dealership versus a private seller.



Having a firm idea of the car’s value can help you decide how much you’re willing to pay. If the dealer is asking $18,000, for example, but you believe it’s only worth $15,000 based on your research, you may decide to meet in the middle and offer $16,500. The most important thing to remember is to set your buying max before trying to negotiate. Otherwise, you could end up paying more than you intended for a car.

2. Be Strategic

When a lower purchase price is the goal, you don’t want to go in with the wrong approach. Come off as too demanding and the dealer may not be willing to make any concessions in your favor. Go in too soft and they may see you as a pushover.

When you sit down with the salesperson and present your offer, be firm but polite. Let them know that you’ve done your homework and you have an idea of what the car is worth. Don’t let him or her try to steer the conversation off-course; stay focused on the issue at hand. A salesperson may try to distract you by discussing financing, insurance or extras like a maintenance plan; this is a trap you should be prepared to avoid.

Take the opportunity to clearly make your case as to why the dealer should accept a lower price. For example, if you’ve seen the same car sitting on the lot for weeks, remind the salesperson that cutting you a deal would help to free up space for another vehicle. If your inspection turned up something minor you’ll need to have repaired, be sure to point that out. The goal here is to get the dealer to acknowledge anything that might justify accepting your offer.

If the salesperson tells you the dealer can’t take anything less than sticker price, be ready to walk away. At this point, two things can happen: The salesperson will suddenly suggest that the two of you can reach an agreement on price or he or she will shake your hand and tell you to come back if you change your mind.

If the salesman chooses the former, be ready to make a counteroffer to any price that's suggested. The counteroffer may not be much lower than the sticker price but it’s an opening to further negotiations. At this point, you can increase your own offer slightly, but remember to keep your absolute ceiling in sight. It may take some back and forth but eventually, you may be able to compromise on a price that’s acceptable to both sides.  

3. Be Persistent

Negotiating is a fine art and sometimes, the salesperson simply may not want to hear what you have to say. One ploy is to adopt hardball tactics to try and you wear you down. This is where the true test of your negotiating skills comes in.

If your offer is refused point-blank, don’t wear out your welcome. Thank the salesperson for their time and say you’ll be looking elsewhere for a vehicle.Hand over your phone number and say that if they change their mind about making a sale, to give you a call. Then wait and see what happens.

It’s possible that in a day or two, the dealer may call you to tell you they’ve reconsidered your offer. If not, that’s a sign to move on to the next used car lot and begin the negotiations process again. It can be time-consuming and tedious but at the end of the day, you’ll thank yourself if your negotiation efforts allow you to purchase the right car at the right price.


How to Finance a Used Vehicle