The Best Way To Negotiate A Price On A Used Carpmc Staff9 Months Ago
Buying a used car is an excellent way to save money. Cars are depreciating assets and the older they get the less they are worth. However, value and the miles a car has left in it arent always correlated. You can buy a car with well over 150,000 miles on it and have it last another 50,000 or even 100,000 miles if it has been well maintained over its life.
The initial few years of depreciation are the steepest meaning the car loses the most value the fastest in this life stage so buying a car after it has reached this is the best way to get the most bang for your buck.
When it comes to negotiating on the purchase of a used car, the seller traditionally has the advantage. They have more information about the vehicle, and if you are dealing with a dealership, they have a lot more experience buying and selling cars and nothing but time on their hands.
Regardless of who you purchase from, the best way to negotiate price on a used car is to be knowledgeable on the vehicle and how much it is actually worth using sources like Kelley Blue Book or Edmunds. In addition you should make a reasonable first offer for the vehicle that is around 20% below that fair value. Negotiating up in small increments from your first offer is the best way to secure a good deal on a used vehicle.
Best Practices For Negotiating
- Know that nothing is personal, you dont know the other person and they dont know you. Youre both just trying to get a fair deal. Stick with the numbers and keep conversations related to the vehicle.
- We dont negotiate with terrorists! Jokes aside, never do business with someone who tries to pressure you or intimidate you into a sale.
- Dont be afraid to walk away from a vehicle. For whatever reason! If the person selling the car gives you bad vibes, you dont like the price, the car doesnt drive well etc.
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No vetting of sellers
Charges advertisers when their car sells
CarGurus was created in 2006 by TripAdvisor co-founder Langley Steinert to help consumers post questions and reviews of cars and local dealers. The company later added a marketplace to its site with a car evaluation tool that makes it our choice as the best site for cheap cars. CarGurus is accredited with the BBB and has an A+ rating with the organization.
What sets CarGuru apart from most other online auto markets is that it gives each car a deal rating and sorts the results from the best deal to the most overpriced. Since no one can pay to boost their listings, only dealers that consistently offer the best deals will get the best scores.
CarGurus also uses advanced algorithms that compare every detail of a car to similar cars on the marketplace to assess the market value of any vehicle. Combined with information on how long a car has been listed as well as whether its price has risen or dropped over time, this helps shoppers know if theyre looking at a good deal or if they have room to negotiate.
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Tips On How To Negotiate The Price On A Used Car
If you are shopping for a used car, where apples-to-apples comparisons aren’t possible, your goal is to make an offer that is as low as possible but still in the ballpark. Use the vehicle’s estimated trade-in value as a guidepost for what the dealership might have paid for the vehicle. Compare that to its estimated dealer retail value on Edmunds. Your goal is to land in between those numbers. You can also look for comparable used vehicles near you to see what others are listing. It’s important to note that the miles and options are similar & mdash otherwise, you won’t be making an apples-to-apples comparison. Once you’ve done all this research, you’ll have a better idea what a fair price would be.
If you’re the first to make the offer, give yourself room for the dealership to make a counteroffer. In other words, if a vehicle is on sale for $20,000 and your research shows you should be paying $18,000, make an offer of about $17,000. You should know ahead of time what your opening offer will be, how you will counter the dealer’s offer, and what your highest price will be. Then when you’re in the heat of the moment, you won’t get flustered. You will negotiate like a pro.
Here are a few more tactics to help you get a good deal on your next car:
Don’t buy a car in a hurry . And don’t go into the car dealership unprepared. The salesperson may draw you into offer-counteroffer negotiations before you are ready.
Check all the numbers and ask for the out-the-door price.
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Cars & Bids
Cars & Bids is an online auction site for cars from the 1980s and newer and is our choice as the best auction site due to its easy listing process, car history reports, and low auction fees.
Low listing and commission fees
Every vehicle includes a history report
Some listings featured by a YouTube celebrity
No listings for cars made before 1980
No financing options available
No buyer and seller tools or resources
Cars & Bids was created in 2020 by automotive reviewer and YouTube celebrity Doug DeMuro to help modern car enthusiasts buy and sell cars quickly and safely. The site is our choice for the best auction site because of its ease of use and focus on protecting both buyers and sellers.
Unlike other auction sites which can take weeks to get a sellers auction live, Cars & Bids gets cars listed as quickly as possible and works with sellers to figure out the best schedule. The site also offers a simple submission process that lets sellers know quickly whether or not their car will be accepted.
In an effort to protect car buyers, Cars & Bids provides a vehicle history report for every vehicle it auctions free of charge instead of asking the seller to pay for one. As a fun bonus, Doug DeMuro will occasionally choose a listing to review bringing extra eyes and buyers to specific auctions.
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Know The Specs On The Vehicle
The single most important thing you need to do when negotiating the price of a used car is to know how much it is worth! Look up the market value online using Kelley Blue Book, Edmunds or another pricing guide. Be sure to enter in the exact information for the car like the mileage and color. If you know the trim package interior colors and fabric types as well as the entertainment system in the car be sure to add that info as well to get as accurate an estimate as possible.
You cannot hope to negotiate properly if you dont know the fair value of a vehicle. Use one of these well trusted 3rd party sources to determine an unbiased value of the vehicle
Test Drive The Used Vehicle
It is important to test drive the car before buying a used car and finalizing the deal. Having driven the vehicle you are negotiating for, you will be much more knowledgeable about how it handles and whether it drives well. The test drive, will help you understand where specific shortcomings in performance can be found and see if those shortfalls meet your needs. This might also help to bring down the price of that used car.
Test driving the vehicle also helps you to make a decision based on how the used car functions and the price, rather than simply seeing the car, falling in love and making an emotional decision. It also gives you an opportunity to ask any additional questions that you may have before finalizing the deal.
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Negotiating For Used Vs New Cars
Regardless of whether a car is new or previously owned, there is one principle that applies to both situations: Successfully negotiating down the purchase price can save you a lot of money.
The main difference will be how much you can negotiate off the retail price:
- New cars. It is considered reasonable to start by asking for 5% off the invoice price of a new car and negotiate from there. Depending on how the negotiation goes, you should end up paying between the invoice price and the sticker price.
- Used cards. You tend to have more wiggle room with used cars. Depending on how much information you already have about the cars value and condition, you can start by requesting a larger price discount and then negotiate from there.
Either way, it is essential to shop around and be prepared to walk away if you dont get the perfect deal that works for you. The dealer might try to seduce you with the attractiveness of the overall package, but the price of the car is what ultimately matters to your bottom line. If the price is not right, walk away. There will likely be another opportunity to buy a car down the road.
If They Dont Negotiate You Dont Buy
A newer tactic is showing up on used car lots. The salesperson will claim that they dont negotiate because they dont want to waste anyones time with the back-and-forth associated.
They promise that their deal is good and they urge you to just take it. Heres a rule that you should always follow: if they dont negotiate, you dont buy. Its a guarantee that theyre charging way too much for the car and you need to walk away immediately.
The real reason why they dont negotiate? They want a bigger bonus and commission from the deal.
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Try Negotiating Over Email
When negotiating with multiple dealerships, consider doing so over email. This way, youll make sure you have everything in writing.
Sonia Steinway, president of Outside Financial, suggests contacting several dealers and asking each for its best price.
This helps you make an apples-to-apples comparison when looking at different quotes. Negotiating over email may also make it seem less personal, which can help you keep emotion out of the process.
What Do You Need To Pay Attention To
Key features of the conversation:
- If it has been less than six months since the last owner bought it, there are probably a lot of problems with that car.
- It is possible that the seller just urgently needs money, but it is still not worth taking the risk.
- If the seller is hesitant to answer, rushing to finish the conversation, the seller may not have all the information, meaning he is either acting under power of attorney or is an intermediary.
- If the salesperson specifies the brand of the car, they have difficulty in mentioning the mileage or the color of the car, they are an intermediary.
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Options If You Dont Want To Haggle
If you dont want to negotiate on car price but still want to try to find a good deal, you have a few options.
You can use a car-buying service that pre-negotiates a price on your behalf. Sams Club, Costco and many others all offer this service. These services may get a referral fee from the dealer though, so you may not get the absolute best price possible.
Another option is shopping at a no-haggle program. These programs exist for both new and used cars.
o-haggle auto buying helps you avoid the time and hassle involved in haggling, which most people dont enjoy, says Steinway.
While these no-haggle programs can lessen the pain of the car-buying process, you may end up paying more for the convenience. And youll need to be careful if going this route do your research first on what a fair price is for the car youre interested in.
After Negotiating Read The Paperwork
You have done the hard workresearched, haggled and agreed on a price. Now it is time to sign paperwork to complete the purchase. Remain vigilant before signing the paperwork and be sure not to skip the sales contracts fine print for any fees and hidden costs. The dealer may attempt to throw in extrasusually unnecessary add-onssuch as extended warranties, gap insurance and tire protection.
Given how much it costs to buy a car, the last thing you want to do is pay even more for add-ons, if you dont need them.
Dont be afraid to ask a lot of questions and for the dealership to remove any unwanted extras.
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Negotiating Used Car Price With Dealers
There are some advantages to purchasing a used vehicle from a dealership instead of a private seller. First, it’s easier to shop a range of cars from a dealers lot rather than searching for used car listings from private sellers online. So automatically, you may have a better chance of finding something that fits both your needs and price range.
Dealers are also more likely to clean and perform a basic inspection of a car, plus they are governed by Federal Trade Commission rules as well as state and local regulations. “If you buy from an established business, it has a reputation to uphold, Reed said. In many instances, they will also offer some sort of warranty even if it is only for 30 days.”
How To Negotiate The Price Of A Car
Whether youre a pro at it or a novice, negotiating is a key part of the car-buying experience. A recent Deloitte study found that 36 percent of consumers absolutely hate having to haggle on price at a car dealership. But it remains essential if you want to get the best possible deal on a new or used car, truck or SUV, and that means negotiating face-to-face with a salesperson.
Some shoppers try to circumvent the process by getting offers from various dealerships over the phone or online. You probably wont be given a dealers absolute lowest price just by asking for it, but at least you can get some indication of how willing salespeople are to deal. In the end, though, youre going to have to do some old-fashioned horse-trading.
Heres how to survive the process and strike the best available bargain on a new or used vehicle.
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Foregoing The Test Drive
As many as 16% of buyers of used cars don’t test drive the car before making the purchase. On the other hand, first-time buyers of new cars test drive as many as seven new cars, on average, before making a purchase.ï»¿ï»¿
This disparity in statistics might be why there are many third- and fourth-owner used cars on the streets. When you don’t test the asset you’re purchasing, you run the risk of experiencing a bout of buyer’s remorse. In the case of used cars, it’s imperative to test drive a few before making a purchase decision. This protects against buyer’s remorse and also ensures that the car is running properly.
How Used Car Sellers Make A Profit
Used car dealers need to make a profit and they make it from you. Do you know how?
From your trade-in when they sell it for a profit. Buying used cars at a wholesale price and adding 10% to 15% mark-up to arrive at a retail price. Upselling your things like extended warranties, finance packages, and extras such as pain and fabric protection.
Before you start negotiating a used car deal take these into account.
Know what your trade-in is worth and decide what amount you will settle for before you talk to the seller. If you cannot get a reasonable price, you may be better off selling it yourself.
You do not have to finance your car through the car dealership. You can get your own finance from any bank or credit union. When the dealer starts talking finance, let them know you have your own. But it can be worth listening to the deal on offer as you may get a better interest rate. Be careful though. Make sure any finance deal from the seller stacks up against the offer you already have.
Extended warranties may have value and can be expensive. Consider whether you really need one. Better still, get third party quotes for an extended warranty and use them as a bargaining tool when the seller brings it up.
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Can You Sell A Car With A Loan
It is possible to sell a vehicle when you still have a loan, but it adds a few extra steps. There are a few different options in this situation. One option is to pay off the loan in full before selling the vehicle, which involves contacting your lender to determine your payoff amount. After paying off the loan, your lender will release the lien.
You can sell a vehicle that’s financed without paying it off by selling it to a private buyer or trading it in with a dealer.
Set A Target And Budget
Before going into a negotiation, you should have a specific target budget in mind. Without setting a limit for yourself, you may end up spending more than you can realistically afford. Its a good idea to set a manageable range for yourself and then search for cars listed around or just above your maximum price.
Keep in mind that there are many things that can affect the price of a used car, so you may be able to negotiate more expensive vehicles down to your budget range.
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