How Do I Negotiate A Used Car Price?

Buying a used car instead of a new one can save you a significant amount of money. However, getting a great deal will take some strategizing. The dealership will be motivated to make as much profit as possible, so you’ll have to know how to leverage each opportunity that comes your way. Here are some tips you can use to negotiate the best price possible.

Do Your Homework Ahead Of Time

Used car prices can vary significantly from dealership to dealership and even from city to city. Therefore, it pays to do some research ahead of time and browse online before you ever leave your home.

Your efforts will be the most efficient if you can narrow down your search by:

● 1-3 vehicle models you’d like to own

● A limited range of model years

● The maximum number of miles the vehicle can have

Spend a week or so browsing multiple dealership websites, and you’ll soon become familiar with the market rate for a used vehicle that meets your criteria.

Get Pre-Approved For A Loan

Many used car dealers are in the business of offering dealership financing to their customers as they may receive incentives from lenders. While financing through the dealership may seem like a hassle-free way to cover your purchase, you should first check the rates of independent lenders, such as those that offer personal loans for a car, and see if you can get pre-approved as you might qualify for offers with more favorable rates and terms. Pre-approved just means that the lender has not looked at your full credit history but instead has checked your basic credit credentials and could be ready to grant you a loan when you’re ready to make a purchase – provided you meet all their borrower requirements.

You won’t have to offer any collateral if a personal loan is unsecured. Collateral is something of value that the lender can seize if you default on your loan. Remember that with a dealership-financed auto loan, the vehicle is the collateral. The no-collateral requirement of an unsecured personal loan is a major advantage over other loans used to purchase a car.

Calibrate The Negotiation

Once you go to a used car lot and start speaking with a salesperson, one of the first questions they’ll ask is how much your budget is. Never reveal the maximum amount you’re willing to spend. Always start negotiating with a figure that’s lower than your allowable budget.

When discussing a particular vehicle, recall the research you conducted earlier. Propose a price slightly below the market rate, striking a balance where you appear informed but not overly aggressive. This signals to the salesperson that you are aware of the prices at other dealerships, motivating them to negotiate further if they wish to finalize the sale.

Keep in mind that negotiation is all about give-and-take. You can assume that the salesperson won’t take the first number you offer, just like you shouldn’t take theirs. You’ll have to invest some time going back and forth until you land on a price you’re comfortable with.

Be Prepared To Walk Away

If the salesperson seems unwilling to negotiate or come down on the price, don’t hesitate to leave the table. Politely thank the salesperson and any other staff that has joined the negotiation, but subtly let them know that you’ll be making a purchase elsewhere.

When you begin to walk away from a deal, the salesperson will choose between one of two options. They can let you leave their lot and give the sale to someone else, or they can come down on the price. Either way, this puts you in control.

The Bottom Line

The key to negotiating a reasonable price on a used car is always having the upper hand. You can never force a dealership to sell you a vehicle at a certain price. However, by becoming an informed shopper and getting pre-approved (either for an auto loan or personal loan), you’ll have better confidence to stand your ground and get the price you’re after.

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