A great aspect of buying a used car is that there’s invariably room for negotiation. That’s not to say you can just walk into a dealership, lay down your demands and walk away with what you want. There is a process and some degree of skill involved when it comes to any form of negotiation, and negotiating used car prices is no different from that.
In today’s blog, we’ve prepared a list of useful tips for you to use when preparing your own negotiation for a used car.
- A wider look at your target vehicle in the marketplace will help you understand what price points are reasonable compared to relative condition and other factors.
Having a strong negotiating position depends greatly on you being able to speak confidently with a seller, armed with real knowledge about the marketplace. Let’s say you’re looking to buy a used Honda Civic sedan. The best thing you can do is go get your research hat on and start investigating what price these cars generally go for.
You can check the Kelley Blue Book, existing listings for private sale, and what dealerships are selling them at. Armed with that information, you can do 2 important things. Firstly, you can plan out your price range (see below for more), and secondly you can know whether prices offered by private sellers and dealerships are reasonable or not.
Never enter a used car negotiation without being armed to the teeth with all the price, specification and other information that you can get your hands on. Thanks to the Internet, it’s easier than ever to do that.
- Use the resources at your disposal to get a vehicle history report yourself, or request one from the seller. Paid reports are more useful and detailed than free ones.
Organisations like CarFax offer invaluable information into a car’s history, including its title status, mileage, previous ownership, accidents it has been involved in, and how it was used (e.g., as a personal/private vehicle or for commercial activity). The main downside to a CarFax report is that it is not free. A single report costs $39.95, or $54.95 if you also want that to come with a lien check.
The good news is that it’s not unreasonable for you to ask a seller to provide a CarFax report in good faith as a way of proving the real condition and clean history of the vehicle. Dealerships are much more likely to have these reports and will likely include them as a matter of course, but with private sellers it might take a little persuasion to get them to provide one. A good idea is to remind them that if they can prove the car’s history with such a report, then in effect it improves their own negotiating position as a seller since you’ll be more confident as a buyer after you have that reassurance.
- A close examination of the vehicle’s condition is paramount. From minor damage like paint chips and discoloured upholstery to more serious problems like flood damage or extensive rust — you need to know all the defects.
No two used vehicles are ever quite the same in the types of damage and defects that they can show. Some types of defects may be common, but they hardly ever occur in the same place. For instance, minor chipping or swirl marks on the paint are fairly common, but could occur anywhere. It’s critical therefore to be clear on the exact condition of the car.
Reputable dealers will provide close-up high-res photographs of any defects, but you might not get the same from a private seller. When you’re buying privately, be sure to look carefully at the car’s condition. Common things to look for include: paint chipping, swirl marks, dents, scratches, rust (especially on undercarriage, wheel arches and the bumper), discolouration in the upholstery, cracks in the dash, chips on the windshield, worn tire tread, stains or markings on the carpet and upholstery, and so on.
These are all non-mechanical defects that even people with no professional knowledge or training should be able to locate and recognize.
- Visible condition is something most people can check themselves, but how well the mechanical side is working often takes a trained eye. Commissioning an independent inspection will reveal any and all mechanical defects, both present and potential.
Following on from your visual inspection of the car’s condition, a more thorough inspection of the mechanics is also in order. You might not require this when buying from a dealer, as long as the dealer offers either a period of unconditional return to allow you to try the car and return if defects arise, or a used car limited warranty. Many dealers do offer warranties as a way of inspiring confidence and proving that their own pre-sale inspections are rigorous and effective enough.
If buying from a private seller, however, you can either commission an inspection yourself using an independent used car inspector, or you can ask the buyer to supply a recent report from such an inspector, and preferably one that you can call up yourself and verify the results. Any seller unwilling to undergo an inspection gives you a distinct negotiating advantage. Alternatively, it can be enough of a red flag for you to simply walk away. If you love the way the car looks, you could get the seller to pay for an inspection as a condition to you agreeing to a certain purchase price.
- Before entering the negotiation, work out what range of prices you would be willing and able to pay depending on certain conditions. It’s important not to stray far outside of these boundaries, if at all.
It’s one thing to know how much money you can afford when buying a used car, but you don’t want to make that sum your opening offer. The maximum amount you can afford is your bottom-line price that you’d accept for the right car, but will never exceed. When making an opening offer, you can start at around 10-15 percent lower than the asking price. This will test the seller’s resolve.
If the seller immediately refuses and appears unshakable, then you can increase your offer slightly, perhaps by 5 percent, and see how they react. To do this, you have to plan out in advance what your various offers at each stage will be. As you prepare your price range, don’t forget to factor in the apparent desirability of the vehicle.
For instance, if someone is selling a very commonly available model that is being sold all over, then there’s no need to negotiate hard. Make an opening and second offer, but if they’re refused, you can just move on. If the seller gets desperate, they may call you, but in the meantime you don’t need to worry. If the car on offer is a rare find, however, you might want to be ready and willing to go to your bottom line to secure it. To do any of this, you need a firm grasp on those numbers in the price range.
- When dealing with sellers — even the difficult ones — maintaining a respectful demeanour is important. Sinking to a lower level might be what they want from you to gain an advantage. At the same time, however, don’t be shy about clearly stating your requirements.
We are Canadians, one and all, and so being rude to a dealer or private seller is absolutely not on. No matter how seemingly rude or dismissive any seller is, you shouldn’t reciprocate. Retaining your composure and being reasonable at all times will allow you a certain level of “moral leverage” that could work in your favour further down the road. You can always walk away from unpleasant sellers, though (see Step 8 for more).
While maintaining your respectable tone, however, you shouldn’t be afraid to clearly and unambiguously state what it is you want and expect from a car deal. This is especially important when dealing with dealerships. Private sellers only have 1 car on offer, so you don’t really need to outline your demands. You either want that car, or you don’t. Dealerships, however, have many used cars on offer and it’s critical that you spell out clearly what you need and stick to it.
Dealerships are likely to try and shift your attention to the car they’d like you to buy. That’s a part of their business style. If you’re clear and firm — without being rude — you’ll steer clear of this potential pitfall.
- The process of negotiating can be slow at times, but maintain patience. Don’t badger sellers into giving you answers immediately. If you’ve cast a good wide net, you’ll always have alternatives if sellers “go dark” on you.
Buying the right used car and negotiating well for it can take time. Not every negotiation can be opened, conducted and wrapped up in a single conversation. If you’re chasing the perfect used car, you might need to be ready for something of a negotiation “war” with the seller. It’s all very civil, of course, but there’s a lot of back and forth and you need to maintain a patient composure at all times.
If you get too hasty or impatient, it can lead to you “blinking” and thus handing a negotiating advantage to the seller. If you’ve offered reasonable terms but the seller is playing hardball, give them time to come around. If they really are being unreasonable, chances are other buyers won’t give in either. Your own knowledge and understanding of the market that you garnered in Step 1 should help you have confidence to be patient.
- Don’t ever feel the need to complete a sale just because you feel you have to or that “you’re in too deep.” Before anything is signed, it’s never too late to walk away!
Finally, never be afraid to walk away from the deal if you think conditions have changed too much, or if in the meantime you’ve found something better that suits your needs more. The only way that you’re ever “in too deep” is if you’ve put pen to paper. Even then, however, there may well be ways out of it if you really don’t wish to proceed. Getting the right car is the most important thing.
Don’t forget, too, that walking away can be a powerful negotiating tool. Perhaps you found another model with not all the features you wanted, but a much better price. The seller might well lower their price to keep you interested if they think you’ll really walk away to get the other car. It’s a classic market bartering strategy!