Six Tips for Negotiating the Price of a Used Car

used car

Everybody loves a bargain, and smart negotiating can help you save a bundle on a used car. Armed with these tips, you are in a position to get the best possible price on your next used automobile purchase.

1) Understand what the car is worth.

Use resources such as Edmunds True Market Value and Kelly Blue Book to find out what other people are asking and paying for the car you have your eyes on. Entering negotiations without this information puts you at a serious disadvantage, while doing this research ahead of time gives you a solid foundation to begin negotiations.

2) Check the history of the vehicle

Services like Carfax will tell you a lot about a car. Any reputable dealer should be willing to provide you with a Carfax report or one from a similar service. If you are buying from an individual, you may have to purchase the report yourself, but be very wary of a dealership that will not show you a report. If you see something you don’t like on the report, you can walk away or use it as leverage to get a better price.

3) Be prepared to walk away

Car salesmen negotiate all day long every day of the week, it’s their job. A good salesman is good at reading people. If the salesman believes you are overly eager or unwilling to pass on the car, be prepared for a rough time. You must be willing to walk out. Set a maximum price in your mind before you ever speak to a salesman, and be ready to stick to it. If you have conviction, the sales staff will sense it, and you will be in a position of power.

Signal your disinterest and willingness to leave. If the salesman asks you to wait while he takes your offer to his sales manager, get up and take a walk. Make him come to you. If the negotiations aren’t going as well as you like, make a phone call while the salesman waits on you. If you’ve seen a similar car on another lot, start making noises about leaving to have a look at that one. These things may sound petty, but they signal that the power rests with you, and not with the dealership.

3) Save your trade-in for last

If you tell the dealer that you plan to trade in another vehicle, he will do everything he can to build the cost of the trade-in into the purchase price of your new vehicle. Negotiate your price, then drop the trade-in on them. There’s an adage in negotiating that you can reduce your asking price, but you can’t raise it. Use that against the seller.

4) Start low and give ground slowly

If your research tells you the car you want is worth $10,000 and you walk in and offer $7,000, you don’t expect them to shake on it break out the paperwork. Rather, they will tell you that your price is ridiculous and they can’t possibly let the car go for less than $12,250. Your job is to get that price as close to $10,000 as possible, and every dollar under that is a win for you. When you get to a place where you feel the dealer will not budge on the price, see if you can score some free dealer services or add-ons for your car. Free oil changes and a steering wheel cover aren’t much, but every dollar in value that you squeeze out of the deal is to your advantage.

Use the strategies from tip #3 to make sure you remain in charge of the negotiations.

5) Maintain focus, and don’t let them distract you

Dealerships use a tool called the four-square. The four-square is nothing more than a piece of paper divided into four sections, but it is one of the most powerful weapons in the salesman’s arsenal. If you let him have his way, the four-square will end up covered in so much nonsense that you won’t know what’s going on.

The four-square shows your trade-in value, the purchase price, your monthly payment, and your down payment. The salesman will write numbers, and then scratch them out, and change them, and do his best to distract you from the overall amount you’ll be paying. If you don’t like what he offers for your trade, he’ll put a bigger number in there, and adjust your monthly payment. If you don’t like your monthly payment, he’ll do something about that, but he’ll gloss over the fact that your trade-in value just went down, or the down payment just took a jump. A favorite technique is to keep you focused on that monthly payment, which will sound low and seem like a great deal until you realize those low payments don’t end until you’ve paid $3,000 more than you thought you were.

Let the salesman know that you know what is going on, and stick to the price. Don’t let the dealer get you negotiating anything else on that four-square. In the end, it’s how many total dollars you pay that really matters.

6) Have your financing lined up

Depending on the dealership to find financing for you takes a lot of power out of your hands. Talk to your credit union or your bank, apply for financing ahead of time, and be ready to pay on the spot. Seeing cash in hand in a strong motivator for the seller. Arranging your own financing will get you the best interest rate and terms, and will give you leverage to negotiate the best purchase price, a double-whammy in your favor.

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