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12 Tips For How To Get The Best Deal On A Used Car
Hanna Kielar9-minute read
UPDATED: December 12, 2022
Many people would rather get a root canal at the dentist than negotiate for a used car from a dealership, but it doesn't have to be hard. The key is to understand the process before you begin. The following tips will allow you to stay one step ahead of the seller, helping you get the vehicle most suited to your needs as well as the best deal on a used car.
Why Used Cars Are A Good Value Proposition
Advantage: Buyer
One of the biggest drawbacks to buying a new car is that its value depreciates the moment it’s driven off the lot (dropping an average of 20% of the purchase price in the first year). Buying a used car means you bypass that immediate loss of value while hopefully getting a car that has tens of thousands of miles of life left on the road. Provided you have a clear idea of the car you need and how to negotiate with the seller, buying a used vehicle can significantly reduce your monthly payment. Still, buying a used car is filled with unknowns, making it a stressful experience for some people.
One of the nice things about the used car buying process today is that you, the buyer, have many more options than just a few years ago. While there are still used car dealerships in every neighborhood and private sellers who advertise locally, modern technology has made it easier than ever to shop for a high-quality used car online, allowing you to shop thousands of vehicles from all over the United States.
12 Tips For How To Negotiate Used Car Price
Buying a car online has its advantages, but you still have to know how to negotiate to get what you want. And even when you shop for a car online, the sticker price is still just the starting point to a negotiation. The following tips can help you learn how to get the best deal on a used car and find the ideal vehicle for your needs.
Tip 1: Know Your Needs And Numbers
Make a budget so you understand what your boundaries are for price and monthly payments. By creating a clear picture of what you can afford and how much car you can get for your money, you’re setting the stage for how far you can go with negotiations.
Start by writing down the amount of money you earn in a month, and then subtracting 85% of it. Auto finance experts generally advise limiting your monthly car payment to no more than 15% of your income. With insurance, gas, upkeep and other expenses related to the car, you're likely to top 20% of your total income by the end of the month. Check Edmunds or Kelley Blue Book for the current value of cars you're considering, so you can create a short list of target vehicles.
Tip 2: Get Preapproved For A Loan
Many new and used car buyers go into negotiations without financing in place. This is because many people know that dealerships can handle financing for you, but shopping around with other lenders before you negotiate the price of a car can give you the upper hand. Walking in with a low interest rate on a preapproved auto loan can act as leverage to get a discount or better terms from the dealer, a lower monthly payment or more car for your money.
Tip 3: Read Reviews And Crunch The Numbers
When you're figuring out your budget and making a list of vehicles, it's important to read reviews and research the cost of ownership for each car you're interested in. Some cars are more expensive to insure, for instance, especially if they are manufactured outside of the U.S. Other costs such as fuel, maintenance and replacement parts can vary a lot between different makes and models. Plan ahead and make sure these future expenses also fit within your budget.
Tip 4: Take A Test Drive
Nothing really takes the place of getting behind the wheel of the specific vehicle you're thinking about buying and driving it for yourself. Take at least 30 minutes and drive on surface streets and a highway if possible. You can even pull into a parking lot, get out, and walk around the car looking for dents or scratches. Take your time looking the car over inside and out. This is a big purchase and you should know what you’re getting.
When you buy a car online, many sellers offer a generous return policy, which can be better than a typical test drive. Instead of a one-hour spin through the neighborhood near a dealership, this gives you a couple of weeks of real-world testing under the conditions you're planning to drive in before you're fully committed to keeping the car.
If you plan to skip the test drive, make sure you ask for extensive photos and videos of the vehicle from the seller so you can see exactly what you’re buying.
Tip 5: Strength In Numbers
If you're buying in person, there's strength in numbers. Bringing a relative or friend along to the dealership. This not only lets you outnumber the sales rep you're negotiating with, it allows for a “good cop/bad cop” dynamic where you can discuss the merits and downfalls of the car in front of the sales rep as a way to leverage a better deal. Aside from the theater of this, your friend might have a more dispassionate outlook and can talk you out of a bad deal or temper your excitement in buying a new car. Ideally, your partner should know your budget and have the strength to remind you of it when you're tempted to accept a higher price for the car you want.
Tip 6: Keep Your Phone Handy
Many people arrive at a dealer with just a vague idea about the car they would like to purchase. Sometimes, a salesperson may steer a buyer toward a particular vehicle they may not have researched beforehand. If this happens to you, it can be helpful to have your smartphone handy to look up other dealers' inventories and the car’s value on the fly. If the car you're looking at is also available at a dealership 2 miles away for $1,500 less, you could get the salesperson to match that price. If not, you can always go look at the other car.
Tip 7: Leave The Showroom
While they can be very nice, salespeople are also professionals who use tactics that have been honed for decades to get you to buy a car. Keeping you in the showroom is a sales tactic meant to push you toward a deal you might not want. Sometimes the salesperson will ask you to sit while he or she goes to argue your case with the sales manager. This can happen more than once. There is an underlying message that you are not going to be able to leave without buying a car. You can also be made to feel guilty for not closing the deal, that you are wasting people’s time. For inexperienced car buyers, this can be very intimidating. Don't fall for this. Instead, give them your phone number and ask them to call once they've spoken with the manager, and then leave. Another way to avoid this is to announce at the beginning of your visit that you only have 30 minutes to shop. This will get things moving.
Tip 8: Make Sure You Understand All The Fees
The purchase price you bargain so hard for should be thought of as a strong suggestion, rather than a final cost. Always expect about 10% more than you agree to in closing costs, plus a little extra for whatever else they think to stick in there. There are a lot of fees that dealerships might include in the final price that don't necessarily appear on the window sticker. Watch for these in particular:
- Title and registration fee: In many states, dealerships charge a fee for handling the title and registration process for you with the DMV.
- Sales tax: If your state charges a sales tax, it will be added to the final cost of your car and is pretty much nonnegotiable. Be alert to buying a car in a city or county that charges additional sales tax.
- Documentation fee: It takes paperwork to finalize a car sale, and this fee reimburses the dealer for that. Documentation fees can run from under $100 to a few hundred dollars. Several states have caps on this fee, so know your state's laws.
- Advertising fee: This is an add-on that's supposed to cover the cost of listing a car for sale online. If you do notice it, ask for an explanation. Most dealerships will cut it if you insist.
- Dealer preparation fee: This is the cost of cleaning the car before you buy it. Ask for it to be waived, and then ask for a full tank of gas before you go, which can save you the cost of a fill up later.
- Extended warranties: Depending on the age of the car and whether it still has an active factory warranty, you may or may not want an extended warranty. If you don't plan to drive the car for more than 3 years or so, you may decide to refuse this coverage, especially for a car that's less expensive or cheaper to repair.
- Credit insurance/gap insurance: This coverage isn't absolutely necessary, but it can be a good idea in case anything happens in the future where either your car is in an accident or you become disabled and can't pay off the loan.
Tip 9: Ask For An All-Cash Discount
Dealerships sell cars for money, and the easier you make it to get money, the more they will like you. Showing up to buy a car with cash in hand, or the equivalent of preapproval from your lender, might get you a cash discount. Even if you can’t get a reduction in the sticker price of the car, you still might be able to get a discount in the form of free extras, such as new tires, a service maintenance plan or an extended subscription to SXM for the car stereo system.
Tip 10: Have A Back-Up Ask Ready
It is a law of nature that your sales rep will offer you warranty service in lieu of a discount. This plays into the fear that should something happen to the car, you’ll be covered and save money that would have been spent on repairs. Don't take a warranty offer over a price reduction. If the price of the car isn't flexible, ask for more trade-in value if you have a vehicle you’re trading, or an extended warranty for free.
Tip 11: Be Ready To Walk Away
It’s tempting after spending a lot of time and effort in negotiations for a vehicle to just “go for it” and pull the trigger on a purchase. Not all negotiations go according to plan, and if you’re feeling like yours didn’t get you to a comfortable, reasonable place, then it’s time to walk away. Don’t let the emotional investment push you into a financial investment you’re not ready for. This is where it can really help to have a friend or family member along for support.
Tip 12: Get It All In Writing And Sign On The Dotted Line
Buying a car is a significant purchase that requires a contract between you and the seller, whether they are a dealership, an online platform, or a private individual. Protect yourself by ensuring that all details about the sale are reflected within legal documentation. Once you’re satisfied, sign the dotted line.
What’s Different About Buying A Used Car Online?
Buying a used car online can give you a great deal on pricing but there are other reasons to look into this option. Negotiating used car prices in a showroom can be a time-consuming and stressful experience, while buying a car online is typically faster and easier than making the trip to haggle with a professional salesperson. With an online purchase, you can still test drive a car you're thinking about buying and pay for an inspection to put any concerns to rest. Plus, you have an internet-wide selection of used cars to choose from when you're looking for your next vehicle. A larger marketplace drives up quality and choices while driving down price.
The Bottom Line: You Can Negotiate On Used Car Prices
Negotiating for the best price on a used car is a skill, and like any skill it can be learned. You can avoid getting tripped up by common sales tactics if you see them coming. On the other hand, purchasing a car online is often easier and more straightforward.
Skip The Negotiations
Skip The Negotiations
Hanna Kielar
Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.
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