Negotiating Tips for Buying a Used Car

There is a remarkable difference in strategy between purchasing a new versus a used vehicle. The negotiation process of new car pricing is fairly straightforward because the information can be readily found on the Internet. Used vehicle purchases are more complicated for several reasons: you do not know what the dealership paid for the car, you may not know the exact value of the car and you do not know--at least initially--if the vehicle has any problems or not.

Know the Dealer's Cost

This step is rarely taken in the auto industry. In fact, do not be surprised if the salesperson gives you a funny look when you ask. He may try to wiggle his way out of this request, but hold firm and explain that you understand that the dealer needs to make a profit, but you just need to know how much the car was purchased for. Once the request is honored, make a reasonable offer based on the dealer's cost. What constitutes a reasonable profit depends on current market conditions, but most dealers will usually take a deal with $500 to $800 profit on a used vehicle.

Research the Trade Allowance

There are subtle ways to approach this. The simplest method is to ask the dealer for the phone number of the customer who traded the vehicle in. Most states have privacy laws that would require the dealership to get permission from the customer beforehand; always honor this process. Once you get the previous owner's information, contact him and tell him you are interested in purchasing the vehicle he traded in. Use this opportunity to ask him how much the dealer paid him for the vehicle.

Be a Firm Negotiator

When the salesperson leaves you alone to go talk to the manager, they will collaborate on ways to raise your offer price. Do not be afraid to walk out the door if they do not take your offer--but walk slowly. Sometimes just the threat of you leaving is enough for them to cave in. Automotive salespeople and managers often spend 60 to 70 hours a week at the dealership. They usually either get paid very little or nothing at all if they do not sell cars. The salespeople would much rather take a short profit deal than nothing at all.