Who doesn’t love a great deal on a car? While everyone wants one, not everyone knows how to haggle on a used car price. Negotiation is key to getting the best deal. In this guide, we'll walk you through how to negotiate on a used car price like a pro and secure the deal you deserve.
Learning how to get the best price on a used car is not only practical but also a smart way to save money in the long run. With good negotiation skills, you can save hundreds or thousands of dollars off the sticker price and get better financing terms.
Common Myths About Negotiating Car Prices
"The Sticker Price Is Non-Negotiable and Salespeople Want to Trick You"
It is a common misconception that the listed price is non-negotiable. In reality, dealerships have room to negotiate, especially with used cars. But next comes the belief that all salespeople are trying to trick you. While some may pressure you to make a quick decision, not all of them are trying to take advantage of you.
It's important to remember that it is also in their best interest to form long-term relationships with customers and repeat business.
"Salespeople Push for Deals to Meet Monthly Quotas"
It is true that salespeople try to meet monthly quotas; however, some prioritize helping their customers find the ideal car for their needs instead of simply pushing to complete a sale quickly. A good seller can make a deal at any time. Approach each deal with a clean slate, adjusting to the specific dealer's needs.
"You're Getting a Great Deal If Your Monthly Payment Is Low"
A better deal isn't always indicated by a cheaper monthly payment. In an attempt to lower your payment, dealers may prolong the loan term, but doing so may eventually result in higher interest costs. Always consider the car's entire price rather than only the monthly installment. A dealer can get a monthly cost down to just about any cost, but there will be major compromises to do that.
Preparing for the Negotiation
Researching Market Prices and Vehicle History
Being well-prepared and informed is important at this stage, and your first step should be thorough market research.
Start by identifying the type of vehicle you need. Consider your specific needs and preferences—do you have a big family and need a hatchback, or is fuel efficiency your priority, and you prefer an electric car?
Narrow down your options, then begin examining market prices by visiting reputable websites, comparing prices, and reading reviews. You can also check your local dealership’s listings to better make sense of the price range. Remember that the pricing will vary based on the make, the year, the condition, and the car’s mileage.
Ask For a Vehicle History Report
A vehicle history report plays a vital role by providing important information you need about the car you are considering before purchasing it. The car’s accident history, title status, and service records can help prevent potential hidden issues and costly repairs.
To check the vehicle history, make sure you have the vehicle identification number (VIN) of the car you are interested in. The VIN will give you access to comprehensive reports via services like AutoCheck or Carfax.
We also recommend asking the seller for the maintenance records or service history to understand how the car has been treated by its previous owners. Don’t forget to check for recalls.
Understanding Dealership Pricing Strategies
- The One-Price Model: This is a simple strategy, imposing a single, fixed price on any vehicle. The pricing cannot be negotiated. Any prospective buyer will either accept or reject the confirmed sales price that the dealership offers.
- Psychological Pricing: Dealerships price cars slightly cheaper to make them appear more attractive to customers. For example, a car that costs $40K is priced at $39,999.
- Bundle Models: Prospective buyers like it when dealerships include extras such as oil changes or windows. No matter the need for these extras, the package might make the entire price tag look much more alluring.
- Competitive Pricing: Dealers price slightly below the competition to draw in customers. If similar cars cost $26,000, for instance, you may market them for $25,680.
- Loss-Leader Pricing: This strategy involves offering a product at a discount in an effort to draw in clients and encourage them to buy more lucrative products. Retailers frequently use this strategy to increase sales of other goods.
Knowing Your Budget and Financing Options
Don’t go to a dealership with no fixed budget in mind. Before stepping into negotiations, it’s important to plan your budget and financing options. This is especially crucial if the dealership uses a loss-leader strategy. The goal of this type of pricing is to make you spend money on add-ons or extras. But if you know your budget, you can avoid being trapped by dealerships that use this strategy and engage in negotiations over a fair deal.
Best Negotiation Tactics to Get a Great Deal
Now that we know how to prepare before negotiating and the popular pricing strategies used by dealerships, let's dive deeper into negotiation tips to secure a good deal.
Making the First Offer – How Low Should You Go?
Haggling can be a challenging experience. With so many factors to consider, it’s easy to feel overwhelmed. But how do you negotiate a used car price effectively?
It’s smart to wait for the salesperson to make the offer first, as it may be significantly less than the price you are willing to pay. The first rule is that you suggest a price that is less than what you are willing to pay. A good rule of thumb is to start around 10-15% below the price you’re ready to pay. If the salesperson responds with a higher price, kindly counter with an offer 10% below the asking price.
However, it’s important to be reasonable with your offers. Offering too low might insult the seller and cut off further negotiations. Offering too high could limit your options for further negotiations. You should base your first offer on the car’s market value, the wholesale price, and what similar cars are selling for.
Recognizing and Countering Sales Tactics
Some sales tactics use manipulation to persuade customers to buy things they may not need or want. These sales tactics can incite needless pressure, urgency, and even guilt. Being aware of them will help you to stay in control and make informed decisions.
Misleading information, emotional appeals, and high-pressure methods are common examples of manipulative sales approaches.
Scarcity and time-limited deals are examples of tactics used to make you feel as though you would lose out if you don't buy right now.
Ask the salesperson for details, such as the number of units remaining or whether other dealerships have comparable inventory, to challenge claims of scarcity and determine if the urgency is real or just a sales gimmick.
Another common tactic to watch out for is the bait-and-switch strategy, which is used to promote one product to catch your interest before pointing you toward a different, usually more expensive one. This method may make you feel under pressure to purchase something you hadn't planned on doing.
To counter these tactics, it's important to stay focused on your budget, request some time to consider the offer, and not be scared to back out if the deal doesn't satisfy you. And remember, you'll be better able to keep out of manipulation if you remain confident.
Timing Your Purchase for the Best Discounts
Purchasing a car at the right time can have a big influence on the price. Because salespeople are trying to meet their targets and quotas, they tend to provide the best discounts toward the end of the month, quarter, or year.
They are also more inclined to provide larger discounts or to be more accommodating when negotiating during these periods.
Experts often say that the best time to buy a used car is in slower seasons, such as late winter or early spring, when demand is lower and dealerships give discounts to get rid of outdated inventory.
Holidays, including Memorial Day, Labor Day, or end-of-year clearance deals, are worth keeping an eye on because they frequently provide additional benefits like cashback, rebates, or zero-percent financing.
When to Walk Away from a Bad Deal
Red Flags to Watch for in Negotiations
It's a red flag if you observe a lack of openness in the dealership's operations. Observe how they respond to your inquiries. If they try to conceal something, sidestep questions, or give vague answers, it's also a warning sign. The history, condition, and possible problems of the car are always disclosed honestly and openly by a respectable dealership.
You should exercise caution if the salesperson refuses to get into the specifics of the financing or contract. Keep an eye out for warning signs that could point to unfair terms or deceptive practices when negotiating a car purchase.
If the dealership offers a price that looks too good to be true, it's usually an indication that they may have hidden fees. By identifying these red flags and staying confident in your research and budget, you can avoid making the wrong decision.
How to Politely Decline and Keep Looking
Avoid settling too quickly. Take some time to compare prices, features, and financing options from multiple dealerships.
If you decide an offer isn't right for you, don't hesitate to decline it. Just thank the salesperson for their time and the information they gave you, and let them know that you're thinking about alternative options. This way, you leave the door open for future negotiations by being polite and respectful.
Never be afraid to leave if something doesn't seem right. Having multiple options will always put you in a favorable position when it comes to negotiations.