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How To Negotiate A Used Car Price – A car is one of the biggest purchases most people make besides buying a home. But before you spend thousands of dollars at a car dealer, maybe even tens of thousands of dollars, it’s important to do your research and prepare to negotiate.
Here are some important things to know and strategies to follow to negotiate the car price in the best way for you.
How To Negotiate A Used Car Price
Don’t know how to negotiate a car price? Here’s a quick infographic you can take with you to help you negotiate.
How To Negotiate A Car Loan
When learning how to negotiate the price of a new car, research is absolutely essential. The most important part of the car negotiation process happens before you leave home. It takes more than Google to find a fair car price. You’ll want to use multiple sources to get an idea of how much you should pay for your ideal car, truck or van.
For a new car, check the manufacturer’s website for the suggested retail price (MSRP) before you talk to the car dealer. You should never pay more than MSRP for any new car.
For a used car, look to Kelley Blue Book as a guide to what the car is worth today. A good negotiator will end up with a price below what he found in this step.
If you can find it, the dealer price for a new car is probably the best price, since that’s what they pay the manufacturer. Dealers are rarely willing to sell a car at a loss.
How To Buy A Used Car: A Definitive Guide
Knowing how much dealers pay to buy a car and the MSRP sets the upper and lower limits of your negotiations
In addition to just knowing the total cost of the car, it is important to weigh other cost factors before purchasing a vehicle.
Here are just a few costs you should look out for so you can negotiate the best price…
Budget-conscious car buyers often prefer used cars to new ones. The biggest drop in a car’s value happens when you drive it out of the parking lot. A recent used car with low mileage is almost always a financially sound decision.
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For example, the 2019 Honda Civic Sedan with a manual transmission starts at around $19,550 at the time of writing (March 2020). But a comparable 2018 model with just over 30,000 miles runs around $15,000 to $17,000.
In this example, just by choosing a model that is one year older, you could save about $2,000 to $4,000. Depending on the condition of the car, it could be a much better value to get a car that is two years old.
As you look at the overall savings of buying new versus used, it’s important to consider vehicle depreciation. You don’t want to end up owing more on the car than the car is worth.
Over time, your car begins to lose value, which is also known as depreciation. Some makes and models of cars depreciate faster than others. The age of the car you’re buying can also affect how quickly it depreciates.
How To Negotiate A Car Price In 4 Steps
“The value of a new vehicle can drop by more than 20% after the first 12 months of ownership. Then, for the next 4 years, you can expect your car to lose 10% of its value per year.”
In other words, if you buy a brand new car, it could lose 30% of its value in the first two years. Imagine how much money you could save if you just waited out those first two years of depreciation and then bought it?
When setting your budget, don’t forget about expenses such as gas, maintenance and car insurance. Even if you can afford a high monthly payment, that doesn’t mean you can afford the other costs that go along with it.
Whether you’re buying a used car or prefer a brand new one, you should almost always negotiate the price.
How To Negotiate Price When Buying A Used Car
The dealership down the street may not offer the best price in the long run. Contact dealerships within a few hours’ drive of your home. You may find that the best deal is worth the drive to the next town or even further.
Even when buying a car, you don’t have to visit every showroom in person. Once you know which car you want, you can email the dealership to get a price quote and start negotiations.
If you get multiple quotes, you’ll likely start saving right away by focusing on the dealership with the lowest price.
Car salesmen will try to befriend you and act like your friends, but remember that you just met them and you probably won’t see them again in the future.
What You Need To Know About Independent Used Car Lots
The local dealer you talk to gets paid to sell you the car, so don’t be afraid to raise the price because they’re friendly. That’s their job.
It’s a good idea to be polite. Ultimately, however, you should focus on the numbers, not the relationship.
A showroom or sales office is designed to force you to say yes. Even if it’s not the best offer, you may feel compelled to say yes when someone is staring you in the face. Sometimes just taking that part out of the equation can help.
When you reach out to multiple reps via email, you can do all your negotiations from home on your timeline. It takes a lot of the pressure off and slows down your decision-making process when shopping for a car. This helps you be more thoughtful and get the best price.
How To Negotiate Price Of Used Cars
If you buy a new car and finance it through a dealership, they may show you the monthly payment instead of the price of the car. The monthly payment is good to know, but it shouldn’t be where you focus.
Tell the seller that you want to focus on the total asking price. Ask for a breakdown of all parts of the final price so you can look for any fees the merchant has added and other questionable charges.
When you shop based on the price of the car rather than the monthly payment, you know you’re getting a fair deal.
Trading in your car is a great way to get financing for your next one. But in many cases, the dealership will add the price of the car and the trade-in together when giving you a quote.
Steps To Negotiate A New Car Price Effectively
By taking the focus off the trade-in value and putting it on the monthly payment, you could get less for the trade-in than if you tried to negotiate the trade-in value itself.
Don’t just negotiate the final price. Split it up and negotiate the new or used car and the trade-in separately.
If you’re really intimidated by negotiating or haggling with your local dealer, some services allow you to skip it altogether.
Warehouse clubs like Costco and Sam’s Club often have pre-negotiated prices with major automakers. You can also find these programs at some credit unions, such as USAA. You might pay a little more than the lowest price, but you’ll generally get a pretty good deal and you won’t have to spend time or effort negotiating.
How To Buy A Used Car
There are also some online car dealers that have fixed prices for new and used cars. Companies like Carvana, Vroom and Joydrive allow you to buy online and have your car delivered right to your home address. It’s not quite as easy as buying from Amazon, but it’s pretty close.
Time is important when buying a car. The time, day of the week, and day of the month you shop can affect your bargaining power. Shopping early in the week when traffic is light can help you find a better deal.
If you are able, it can also help to buy at the end of the month when sellers and traders are under pressure to meet their quotas. Super negotiators want to buy at the end of the calendar quarter or at the end of the year when quarterly quotas or bonuses are due.
If you’re planning to get a car loan, you might want to find out about your financing options before you go to the dealership. With perfect credit, you can qualify for a 0% new car loan. Otherwise, a local credit union may have a better rate than dealer financing.
Steps To Buying A Used Car
With bad credit or no credit, improving your credit can save you money when it comes time to buy a car.
When you get a loan through a dealership, you may have room to negotiate financing as well. Also, consider the different terms and how they affect your monthly payment and total interest costs.
Loans longer than five years can be a tempting way to lower your monthly costs, but they can cost you a lot more in total interest over the life of the loan.
Leasing a car can be tempting because of the low monthly payment, but it rarely works out in your favor financially. Leasing is a very expensive way to rent a vehicle for several years, and at the end you have to pay even more to keep it.
How To Trade In A Car
In general, leasing is only a good idea if you plan to buy a brand new car every few years.
When you know the numbers,
