Buying used cars or trucks is a great way to have a "new" set of wheels at a fraction of the cost. In fact, when it comes down to buying used or new, you can usually get a used car with more features than a new one for about half the price. But knowing how to negotiate to get that price is key. Here are three tips that will help you get the deal you want when on the sales lot.
Be Assertive, Not Aggressive
A common fallacy when buying a car is that the customer should have the upper hand by demanding the car you want at the price you want, or else you're walking out.
The truth is, this is rarely effective, and here's why. According to Jason Lancaster, who comes from nine years in the car sales industry, many salesmen deal with customers like this all day. In order to sell cars, the sales person needs to be effective at establishing a fair amount of rapport with the buyer. And this can tax the emotions over time. The end result is a dealer who gets just as frustrated as the buyer when things don't go their way.
If you really want to get the best deal, be assertive without making aggressive demands. Aggressive behavior includes actively violating the rights of others, speaking in a loud tone of voice, criticizing, and trying to dominate the situation. Assertive people, on the other hand, know what they want and need, communicate those wants and needs effectively and with respect. They know how to listen without making unnecessary interruptions, and they're good at establishing eye contact, showing confidence and an ability to pay attention to what the other person is saying.
Lancaster also claims that a number of car dealerships are paid based on how satisfied their customers are, which is reflected in their ratings. Many salesmen will agree that they get their best reviews and ratings from friendly customers. In other words, it could actually be risky selling a car to a buyer who isn't very polite. Bottom line, being assertive but polite will get you much closer to your desired results when making negotiations. Using honey over vinegar is always the best way.
Know the Car's Worth
It's a ton easier to negotiate the best price when the value of your chosen car is clear. Telling the sales person that you can only afford to pay $7,000 on a car that retails for a minimum of $10,000 probably won't get you very far.
There are several ways to find out what you should be spending on that used car. First, Kelley Blue Book will give you a figure on the wholesale and retail value. The wholesale figure is what one could expect to get for a trade in. This is handy information because it tells you what the dealer likely paid for the car. The retail value is how much it sells for on the dealer's lot. The wholesale value is always less than retail, as the dealer must allow for some profit.
Second, you'll have to factor in the car's condition, mileage, and additional features (2-door or 4-door, power windows, automatic, etc.). And lastly, doing a localized search online for a used car's retail value will get you more accurate results. This is because a car's true market value will vary by location.
Suppose you have the Kelley Blue Book in hand, and it states that the car you want to buy retails at $9,500. But a quick search on your smartphone reveals that same car is selling in your hometown for an average of $8,900. This knowledge gives you a little bargaining power and can save you some cash.
Bring In a Down Payment
If you already own a set of wheels that you were planning to trade in for your newer car, consider selling it to a private buyer beforehand instead. This can get you thousands more than a trade in, and more money means more for a down payment.
For example, say the car you want to buy is $8,000, and the wholesale and retail values of your current car are $500 and $2,000 respectively. With a trade in, you'll only get the price down to $7,500. But, if you sell your car to a private buyer and get $2,000 for a down payment, the dealership might be willing to give you a better deal on the car you wish to buy. This is because they have more to gain by getting $2,000 in cash up front instead of a car that might take months to sell. Fortunately, you get to benefit as well.
You see, many dealerships give incentives to customers for brand new cars, offering them 0% APR. In these cases, a down payment isn't really worth it. After all, you won't be paying interest for the life of the loan anyway. For a used car, things are a little different. Incentives aren't usually offered, so a down payment will highly beneficial for you in the long run, bringing down your monthly payment and reducing the amount of interest you pay over the life of the loan.