When buying a car, one of the first decisions that is made is whether to buy a new or used vehicle. For those choosing to buy a used car, negotiating used car price requires a targeted and well-researched approach. A user car buyer can score a highly advantageous deal by doing their homework and flexing their negotiation skills. Similarly, an uneducated used car buyer can walk away having paid too much. This article breaks down the basics of used vehicle price negotiations.
Negotiating Used Car Price vs. Negotiating New Car Price
To begin to understand key used car pricing considerations, it is helpful to look at the differences between new and used car purchases. New cars, by and large, are sold at dealerships, and not through private owners. Dealerships have to fill sales quotas, and they often run specials on specific makes and models. This means that when you come in looking for a new vehicle, a dealer may employ strategies to negotiate with you that would not be applicable when negotiating a used car sale. For new cars, dealers may try to sell you a make or model that is similar to what you are interested in, but a different make or model. This is often due to quotas and model-specific special pricing that car manufacturers are promoting at the time. For example, one might come into a Toyota dealership looking to buy a new Rav-4. The salesperson could encourage you to test drive the Highlander instead, touting its similar features and special pricing. Another important factor of buying new cars is that the advantage is somewhat more with the dealer than the buyer. This is because the market for new cars is a steady stream of customers, and the new vehicles have not yet depreciated. New cars are also much more likely to include a manufacturer’s warranty, also garnering more interest than used cars. If the price the buyer is proposing is not advantageous to the dealer, the dealer can opt to wait for the next buyer, save the car for a different sales event, or in some cases, return the vehicle to the manufacturer.
The used car market is very different. Used cars are sold by dealers and by individuals. They are also sold for different reasons, particularly by individual owners, who could be in situations where they must unload the car, due to a life change, a job loss, having acquired a new car, or selling it for a deceased relative. Individual owners may need to free up garage or driveway space or be wrestling with a number of factors that simply do not affect dealerships the same way. When sold at dealerships, used cars do not sell as easily as new cars. When buyers come in for a used car sale, they often have done some research where they know the dealer has the used vehicle they are looking for, so they expect to test drive that particular vehicle. Used car buyers are less likely to be upsold by dealers. Finally, used cars have already depreciated considerably, as most significant depreciation happens in the first year of a vehicle. The longer a used vehicle sits on the sales floor, the more it depreciates. There are a lot of guides on how to buy a used car that can be very handy in this kind of situation.
In summary, it can be said that new car sales are more of a seller’s market, and used car sales are more of a buyer’s market.
Determining Budget
To prepare for used car negotiations, one must first consider their budget. It may be a flat amount that the buyer has available to him/her, an amount for which the buyer is pre-approved, or an amount the buyer figures out based on how much of a down payment he/she has, and how much he or she can afford for a monthly payment. It is very important to figure this number or range out before meeting any salespeople or private sellers. This way, the buyer is making the decision about the appropriate budget without the pressure or additional information from the seller. Dealers are known for misquoting monthly payments or playing down the final price by not disclosing additional fees until the very last steps in the process, and that can mess with the buyer sticking to his or her budget.
Consider Timing
Timing plays a role is scoring a great used car deal. Research your specific geographic area for when the busiest times are for new car sales. Then, aim to shop for a used vehicle from a dealership within a couple of weeks of that time, as the dealership will have a higher amount of used car inventory through buyers trading in their vehicles when purchasing new cars. An example of this would be shopping for a used car at a dealership in March when dealers have received a wealth of trades during President’s Day week.
Timing also plays a role in buying from individuals. Transitions often force people to sell cars, such as moves, or graduations, so it may make sense to search for used cars in the individual seller market from May – September.
Give Yourself Options
It is smart to consider a number of different used car options. Maybe this means considering multiple years for the same make and model or maybe considering more than one make or model. While you do not want to overwhelm yourself by researching a half dozen options, having two to three options that would work well for your automotive needs would be smart. Doing this would open up more sales scenarios for you, which can make you feel more confident negotiating and less locked into just one acceptable scenario.
How to Talk Down Price of Used Car When Buying
When you are negotiating, remember that dealers and individual sellers expect buyers to negotiate and challenge the list price. Also, remember that the worst thing that can happen in negotiations is that the buyer rejects your proposal. You can then still pay the higher price, or opt for a different option altogether.
When discussing price, make sure to reference the Kelly Blue Book value, based on the physical condition of the car. This resource gives buyers a concrete reference point. Ideally, you want to pay slightly less than the Kelly Blue Book value to get a decent deal. Be open to hearing about customizations or special features that the seller may have added, such as custom rims, a fresh paint job, or a remote starter. These could help explain a higher price and add value to your purchase. Remember that you can always ask for some time to mull the deal over – just let the seller know when you will get back to him or her, and reach out either way.
Consider Details of Used Car Pre Purchase Inspection
When discussing price and making a purchasing decision, consider all relevant details, such as how long it will take you to get the car, what inspection steps will be taken prior to the sale, whether the vehicle will be delivered and how and when you will obtain the title. Consider if you will need to rent a car or take public transportation longer due to the car’s availability, and factor the costs for that into your decision. Consider gas mileage, hybrid / electric implications, and average repair costs in your area for the make and model you are considering.
There is a lot to think about when buying a used vehicle. If you take seriously the considerations listed above, you are sure to score a great used car deal and feel secure in your purchase.
