Yahoo Autos How to Not Overpay for Your Car
We’ve all heard the advice that you should never accept the first offer. This wisdom is especially true in the world of used car buying. Some car shoppers are shrewd negotiators, while others cringe at the thought of the negotiation process. Regardless of your personal preferences, negotiating on a used car can save you a lot of money and is well worth the effort.
How can you stretch a deal to its limit and get a fair price for the used car without prompting a seller to walk away from the deal? Here are some suggestions and tips that will help you in negotiating the lowest price for a used car.
Get a Vehicle History Report
Obtaining a vehicle history report from providers such a CarFax or AutoCheck can give you a better understanding of the condition of the vehicle and help you anticipate issues you may have in the future. You can get a vehicle history report from the dealership, or you can get one yourself through a number of online tools like the iSeeCars VIN check report. You may uncover that a car has been in an accident or has sustained damage, which can provide you with negotiation opportunities. While you should be wary of cars that have been in serious accidents, those with minor cosmetic damage can provide significant savings.
Run a VIN Check
A vehicle history report provides just some of the important information about a used car, but it doesn’t provide the complete picture. Running a VIN check will complement the vehicle history report and provide all the important information about a used car to help shoppers make an informed purchase decision.
How do you do a VIN check? Most vehicle listings include a car’s vehicle identification number (VIN), or if you are looking at a vehicle it can be found on the dash under the windshield (usually near the driver’s side front roof pillar). There are many VIN checks to choose from, but the VIN Report from iSeeCars is the most comprehensive. It provides an important pre-purchase analysis with information including:
Price Analysis: Compares the seller’s price of the vehicle to its estimated market value to help you understand if the vehicle is a good deal. It also shows a graph of similar vehicles currently for sale, which can be used as leverage to get the dealer to lower the price.
Mileage Analysis: Compares the vehicle's mileage to the average for the vehicle. This helps determine if the vehicle has more miles than what is typical, which could present a negotiation opportunity.
Listing History: Shows how long the vehicle has been for sale and gives the average time it takes similar vehicles to sell. The longer a vehicle stays on the market, the more negotiating leverage you may have.
Supply Analysis: Gives the number of similar vehicles for sale in your area. The more vehicles there are, the more negotiating power you have.
Similar Vehicles for Sale: Compares the vehicle’s price, mileage, and market value against other vehicles currently for sale.
This information will empower you to understand how much you should be paying for the vehicle and if it is a good deal. If you are knowledgeable about a vehicle it will show the seller that you are a serious buyer who is interested in finding a deal, and they will be more likely to lower the price. Also pay attention to how long the car has been on the market compared to the average for similar vehicles. A dealer will be more likely to accept a lower price for a car that has been on the market for a long time just to move it off the lot.
Determine Market Value
Knowing a car’s market value lets you know whether a dealer’s asking price is fair or whether a seller is pricing a car above market value. A new or used car’s market value tells you what similar cars are selling for. iSeeCars.com includes a car’s market value in each listing and compares the asking price relative to market value. iSeeCars calculates the market price by analyzing the prices of similar cars for sale locally and applying a mathematical model that also takes into account important factors like price, mileage, condition, and specific features a car may or may not have. Cars are clearly labeled as below and above market value to indicate which are the best deals and which leave more room for negotiation to help get the best price.
Along with iSeeCars, there are other sites that calculate market value such as Kelley Blue Book (KBB) or Edmunds. KBB offers three prices: private party price, trade-in price, and retail price. A reasonable price to pay or offer is usually between the private party price and the retail price.
Get Pre-Approved for Financing
If you get preapproved for an auto loan before visiting the used car lot, it will show that you are a serious buyer. You may also secure a lower interest rate through your own bank or credit union than what the dealer can offer. You can also use it as leverage to see if the dealer can provide an even lower rate on a car loan. Just beware of longer term loans. While they offer a lower monthly payment, you will end up paying more in interest over the life of the loan.
Ignore the “Monthly Payment” Ploy
One of the most common tactics a dealer will leverage is the “monthly payment” question. “What’s your monthly budget?” They know many shoppers think of their car expenses in terms of a monthly payment, and they use this to increase the car’s price, increase the interest rate, or slip extras into the deal. Common dealer lines include, “The extended warranty will only cost you another $8 a month. Now that’s cheap insurance for peace of mind, right?” Don’t play their game. Tell them you will be basing your purchase decision off the total price of the car, not the monthly payment.
Don’t Show Emotion
This is an odd but important step to remember. Whether dealing with used car dealerships or used cars for sale by owner, don’t let them know when you’re excited or that you definitely want the car. The car salesman will be less likely to negotiate if they have you pegged as a sure sale. Let them know that you are also considering several other vehicles from other sellers. You can even have other listings for reference so they know you are considering other dealerships.
Perform a Thorough Inspection
When you see the vehicle in person, be sure to give it a close look to see if there are any glaring problems, like rust, mismatched paint colors, leaks, or worn out tires. You should also look for signs of poor alignment like uneven tire wear, which could mean that there is a suspension problem. If the vehicle passes your first test, take it for a test drive to a trusted mechanic for a more thorough examination.
If you find any issues, you can use them as leverage to ask the dealer for a better price.
No Haggle? No Problem
Some dealers like Carvana and CarMax offer no-haggle pricing, which means their advertised price is final. So before you get your game face on for the negotiation process, make sure the dealer doesn’t have a no-haggle pricing policy. If haggling is not an option, there may be other opportunities for negotiating like on your trade-in value or on extras like new tires or a second key fob. (To learn more about the major no-haggle dealerships check out our CarMax Vs. Carvana guide.)
Determine an Offer Price and Your Maximum Price
You’ve armed yourself with data, lined up your own financing, and kept your emotions in check. Now it’s time to begin the car negotiation process. If you’ve determined the seller is asking a fair price, offer to buy the car for some amount off the sticker price. Make sure that the price you are being quoted is the out-the-door price, which includes all fees and other charges. You don’t want to negotiate and be surprised by a higher figure later. And even after you confirm the car’s price, remember there will be extras you can’t avoid, like taxes and registration fees that are usually rolled into the final amount you’ll pay at the time of purchase.
Determine the maximum price, also known as a target price, that you’re willing to pay by factoring in market price, any repair costs that may be required, and your budget. Don’t offer the maximum price you’re willing to pay as the first price. Make your first offer price $500+ below what you’re willing to pay. (You may be willing to pay more—just don’t let them know it!) If they counter-offer, be willing to raise your price a small increment at a time.
Explain Your Reasoning for a Lower Price
If you determine that the car is overpriced, tell them you are still interested but aren’t willing to pay above market value. Then tell them what your research determined to be the market price. Present your offer to them and let them know you will look for a car elsewhere if they aren’t willing to lower their price. Private sellers especially may be particularly worried about losing the sale, and offer to lower their price! They don’t have regular customer traffic like a dealership.
Be Prepared to Walk Away
Car shoppers often forget their most powerful weapon when buying a car: the power to walk away. If a dealership knows you’re a serious buyer on the cusp of making a car purchase, the thought of you making that purchase somewhere else is kryptonite for a dealer. They HATE the idea of another seller getting your money. Use that! Make it clear you’re ready to buy but also make it clear you’re ready to walk away if they can’t meet your price, or treat you well during the process. Car shoppers often think the dealership is in control. But they want your money, which puts you in control.
Beware of the Extended Warranty and Other Add-Ons
Regardless of whether you secure financing through the car dealer or through an outside lender, the dealership finance sales manager will give you a hard sell for an extended warranty. Extended warranties are seldom worth the extra cost, so stand firm and don’t fall for the salesperson’s pressure tactics. The same holds true for other add-ons that they might try to sell you, like entertainment systems, accessories, GAP insurance, and tire packages. To learn more check out our guide on Extended Car Warranties: Are they Worth It? article to understand if and when extended car warranties are worth it.
How to Negotiate the Price of a New Car
Negotiating the upfront price of a new car is similar to negotiating the price of a used car, but there is no guesswork involved on the condition of the vehicle. As such, there is less wiggle room, but getting a lower price is still possible.
Do Your Research
Find the MSRP of the vehicle on iSeeCars.com, Edmunds, or Kelley Blue Book before you head to the dealership. Be sure to research for any rebates or special offers. Also find the invoice price of the vehicle, which is what the dealership paid for the car. This information can be found on the Edmunds website.
Negotiate off the Invoice Price
Use the invoice price as your starting point for the negotiation. Any figure above this price means a profit for the dealership. Your target price should be 2 percent above the invoice price, so you can start lower and raise your offer until you hit that target. Just like the negotiation process for a used car, you should have a best price quote from another dealership to show the dealer that you are willing to take your business elsewhere.
Bottom Line
Be confident in the negotiation and do not be afraid to walk away if the purchase price isn’t right. Your best line of defense from overpaying for a car is by conducting thorough research. A car salesperson is more likely to lower the price if you give a compelling reason why. And even if they are unwilling to lower the price, it’s always worth the ask. This is also true if the price of the car is below market value, it still doesn’t hurt to ask for a lower price. As long as you’ve done your research and armed yourself with the necessary information about the car, the chances are good you won’t get ripped off, and a little negotiation effort on your part could result in a great deal on your car purchase.
Negotiating is just one part of the complex used car buying process. Check out our comprehensive How to Buy a Used Car guide for more tips on finding the right car at the right price.
If you’re in the market for a new car, you can search over 4 million new and used cars with iSeeCars’ award-winning car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars VIN check report. iSeeCars will provide you with all the information necessary to help you negotiate the best price on a used vehicle.
More from iSeeCars.com:
If you’re in the market for a car, you can search over 4 million new and used cars with iSeeCars’ award-winning car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars free VIN check report. iSeeCars will provide you with all the information necessary to help you negotiate the best price on a used vehicle.
This article, How to Negotiate the Best Car Price, originally appeared on iSeeCars.com.
