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Negotiating the price of a used car fills many people with dread. Since they don’t usually negotiate the price of the things they buy, the requirement to negotiate puts them into an uncomfortable position. And when people are uncomfortable, they often rush things and end up making bad decisions that they regret. But negotiating the price a used car doesn’t have to be a painful process. You can avoid the mistakes that so many people make just by being prepared. Keeping two things in mind can help ease your mind: 1. You don’t need to buy any particular used car. Within minutes of your home, dozen of used cars that will fulfill your needs are for sale right now. 2. You can be in total control of the used car-buying process. Whether you are planning to purchase the used car from a dealer or from an individual, they need to sell the car more than you need to buy it.
Here are some great used-car negotiating tips that can save you a lot of money.
Before you even think about the negotiation process, there are things you should do that will set you up for success. First, you have to determine what car you want to buy. Since very few of us have unlimited funds to purchase a car, a key part of this decision-making process is picking the right car that you can afford. There is no sense in pursuing vehicles that are out of your price range. A good rule of thumb is that a car purchase should not exceed 20% of your gross income. So someone with the median U.S. household income of about $65,000 should be looking at used cars that cost about $13,000 (65,000 x .02 = 13,000.) These numbers should drive the decision on what used car to purchase.
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At this stage, your car decision does not identify a specific vehicle on a dealer’s lot or in an individual’s driveway, but it does hone in on a specific make and model (for example Honda Accord). A model year might be attached as well. How do you arrive at this decision? Well, you have come to the right place. The lists, road tests and reviews, and comparison tests available here on Autobytel.com will be invaluable in deciding what car (or cars) will do the best job of providing what you need at a price you can afford.
The Kelley Blue Book Car Pricing & Car Valuation tool on Autobytel can be invaluable in determining which year/make/model vehicle (e.g. 2012 Toyota RAV4) is going to meet you needs in terms of size, capability, fuel economy, quality, and, of course, price.
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Once you have landed on the theoretical vehicle that will meet all your car-buying criteria, your task is to find an individual vehicle either on a dealer’s lot or in a private person’s garage that will match it. The “shopping around” can be done online, and again, Autobytel.com offers tools that can be a tremendous help. For example, the Used Car Finder can help you discover vehicles that are in dealers’ stocks near you that are in your price range. At the same time, you can comb other sites for vehicles that have been put up for sale by individuals. This shopping process can be of immense help when you start actual negotiations with a dealer or with an individual because in the process, you will gain excellent knowledge of what cars are available and what their asking prices are. This info, along with the pricing info you gather in the previous step, will set you up for success in your negotiations.
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Having shopped around, the time has come to inspect actual vehicles and pick one to three or so for real negotiations. To do that, it is wise to thoroughly inspect and test drive each car that you are seriously interested in purchasing. Your research has told you how the market values the year/make/model vehicle you’re looking at, but you can only tell whether it is worth that amount by test driving it. Get behind the wheel and drive the car as if it were your own. This will help you decide if you want to take the next step — negotiating for the purchase of the car. And, equally important, the information you gather on the test drive can be exceptionally useful in the negotiation process. For example, if you hear the brakes squeal, you might assume a brake repair will soon be required. Informing the seller of that could get you a discount from the asking price on that basis alone.
Before you begin formal negotiations on any car deal you should establish your game plan. Set an upper limit on the amount you are willing to pay for the car, a limit that you will promise yourself you won’t exceed in the heat of negotiations. You should decide on how much your initial offer for the vehicle will be. And that initial offer should be well below your limit on the purchase price and the seller’s asking price. And you should decide how you will proceed with counteroffers as the negotiations continue. A good tactic is to counter in progressively smaller stages. For example, if your first offer to the dealer or private seller is $2,000 below the asking price and the seller counters by dropping the asking price by $1,000, you might counter with an additional $500, making your second bid $1,500 below the original asking price and $500 below the seller’s first counter.
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Because you have invested the time it takes to learn the market price of the vehicle you are interesting in buying, the negotiations should go quickly. Both you and the seller know what the vehicle is worth, and both are negotiating in good faith, so with a few rounds of respectful give and take — offer and counteroffer — you and the seller will arrive at the price you are willing to pay. Negotiations with an individual might take a bit longer because it is possible that the seller has not done much research and just “feels” the vehicle is worth a certain amount of money. In that case, you should feel free to share your research with the seller using the Autobytel.com website and screenshots of web pages that back up your belief about the value of the vehicle.
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Choosing the right car, completing thorough research, and discovering potential target cars in dealer inventory and in the hands of individuals sets you up for a successful price negotiation. That said, sometimes the seller won’t bend as much as you hope they will and you can’t come to an agreement at the upper-limit price you set before you entered the negotiation. This is where even the best negotiations can unravel for the buyer, especially when confronted by a skilled negotiator like a car salesperson or dealer sales manager.
If you can’t come to an agreement for a purchase at the price you have pre-determined to be your upper limit, don’t doubt yourself, your research and, especially, your personal determination of what that car is worth to you. Instead, politely disengage, thank the salesperson for her or his time, and head to the exit.
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If you have seen negotiations come to a halt before you reach a deal and you have decided to leave the dealership or cease discussions with the individual seller, two things can happen. Neither of them is bad for you, the buyer. One possibility is that you go on to the next vehicle you have researched and identified as a possible candidate. If you have come to the end of your list, do some more shopping because used cars come on the market virtually every minute of every day. You haven’t lost anything but a little time. And you have gained some valuable experience and knowledge.
The second possibility is the dealer or seller, seeing you are determined to stick to your upper-limit price, will decide to sell the vehicle to you at that price. In that instance, the act of walking out has served as a negotiating tactic that has helped you buy at the price you are comfortable with.
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As you negotiate the price of a used car, it is critical to remember that you as the buyer are in control of the process. In baseball, they say that nothing happens until the pitcher throws the pitch. In a used-car transaction, nothing happens until you say yes to the deal. Whether the seller is a dealer or an individual, that persons needs you to agree for them to accomplish their goals selling the vehicle. You have veto power over the deal, and you can rest easy using that veto power.
Why? Because just as there a many fish in the sea, so are there many used cars for sale in your area. If you can’t make a deal to buy one used car at your price, you can be assured that there will be another used car to consider in just a few minutes time... and another after that... and another after that.
So if you are armed with facts and willing to stick to your plan, the used car negotiation can be done successfully even by someone who has never done it before. And you might even find it to be fun.
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