Getting a Good Deal on a Used Car

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Getting a Good Deal on a Used Car

For some people, negotiating for a good price on a used vehicle ranks up there with getting a root canal. For these people, there may be a fear of being taken advantage of. Many used-car buyers leave the lot with a nagging suspicion that they paid too much for their vehicle. But learning to negotiate can save you a lot of money if you go through with it.

Before you negotiate

It helps to have the preliminaries taken care of first. This means identifying the car you want, arranging financing, and locating some sellers. Also, know what kinds of add-ons, if any, you are open to buying. By the time you get to negotiating, the price should be the only thing that is not settled on.

A point to remember: even if a vehicle is advertised with a "no haggle" price, there is still sometimes room to haggle, so it is worth considering.

Know the value of the vehicle you’re negotiating. This can work in your favor if the salesperson is asking a price that’s higher. Consult a source such as the Kelley Blue Book for values. Check more than one price guide. Different price guides, such as Kelley’s and Edmunds, can quote different prices for the same make and model, so the best you might find is a range rather than a specific value.

The attitude

Cultivating an air of detachment also works for you (in other words, be ready to walk away if need be), because a salesperson who sees that you are attached to a car has a lot of leeway with you. In cases in which you might need to walk away, it is good to be aware of other sellers who are offering the same vehicle. In fact, mentioning that you know of other sellers who are selling your desired car can make the dealer more competitive.

Trade-ins

Knowledgeable negotiators recommend not bringing your trade-in into negotiations until you have first agreed on a price for the car.

How it begins

The dealer will likely ask you how much of a monthly payment you can afford to pay for a vehicle. This helps the dealer arrive at a price range, but that price range can rise higher than you are comfortable with. Because dealers have ways of arranging financing, they know how to squeeze extra dollars out of you even while staying within your monthly payment range. This is why some negotiators put off telling the dealer how much of a monthly payment they can make until after they have settled on a price.

The prices involved

When you negotiate, you want to pay close to the wholesale price, which is typically what the dealer paid for it. The dealer will want to stay close to the retail value for maximum profit. There will also be the "blue book value," which will not be listed and which will most likely be somewhere in the middle.

Experienced negotiators wait for the dealer to name the first price; that way, they can go lower, something they probably couldn’t do if they were the one to name the first price. They offer a price that is between the wholesale and "blue book value," aiming to stay closer to the wholesale. The dealer may go along with that price, but if so, will try to sell you various add-ons, such as an extended warranty. Know in advance what add-ons, if any, you are interested in. Alternatively, the dealer may insist on a higher price, and you and the dealer will go back and forth until you reach a compromise.

Bringing in the manager

The dealer may also bring in a manager (also called a "closer") to provide some extra "reasoning" aimed at raising the price. This reasoning may be quite persuasive and economically sound. Buyers often feel intimidated by the manager if they aren’t aware of how negotiating works.

Take control

It’s important to be the one in control of the negotiations. That might mean telling the dealer you need to go home to think about it. Dealers expect that this will happen. They will likely call you over the next few days to sweeten the deal, either with a lower price or some free add-ons.

Once you have agreed on a price, you will get the sales contract. This contract will list additional costs such as sales tax, document fees, and perhaps service fees. Know about these beforehand so that you will have the full picture of how much you are paying.