By on August 12, 2011

[Ed: Part one of Steve Lang's updated used car buying guide is here, part two is here, and part three is here.]

When it comes to buying a used car there are two basic negotiating mindsets. You can either be fair and decent or unfair and obnoxious. If you seek to chisel and deceive then chances are you will get a bad car. Only the desperate and deceitful are willing to put up with that type of BS.

Want a ‘great’ car? Then realize that many sellers respond extremely well to honesty and decency. Win – win is no sin. So, karma lovers, here’s some tips for negotiating the purchase of a used car by observing the Golden Rule.

Making the Offer:

If you’ve followed parts one through three of this series congratulations! You’ve found a car that’s superior to 90-plus percent of what’s out there. Rejoice and let the seller enjoy the benefits of properly maintaining his car.

How to Value the Car:

NADA tends to have high valuations while Kelly Blue Book overprices late model vehicles and underprices older ones. Contrary to reality, you can’t find many good $1000 cars regardless of what the Blue Book says. Nor should you get a 2000 Mercury Grand Marquis with over 200k+ for the NADA pie in the sky price of $5000. Stick with Edmunds private party values or the ‘completed items’ section on Ebay.

Negotiate After the Inspection, Not Before:

Some folks believe that you should make an offer before the final inspection. I never do.

The reason is that sellers will then get stuck on an unrealistic price if there are major maintenance issues. A $5000 car that needs $1000 in maintenance was never a $5000 car in the first place.

Most sellers will get stuck on that ‘perfect’ number and reject any substantial adjustments. A good inspection will always yield both parties an offer based on the car’s condition.

How to Negotiate

Begin by declaring your intention to buy the car… so long as the repair costs are addressed in the price.

If these repairs are minor, immediately offer to split the difference for the repair costs and call it good. If, however, mission critical repairs run into the high hundreds to thousands of dollars, you have an “opportunity” ahead of you.

Summon the mechanic!

Ask your mechanic to fax the used car’s inspection report to the seller before you speak with them. At first, the seller (and possibly you) may be shocked by the numbers involved.

This can be especially true with older vehicles and luxury cars. However, with a little constructive conversation, even the most alarming repair costs needn’t kill the possibility of an amicable agreement.

Do The Right Thing

I like to start negotiations for cars with repair “issues” by giving the seller an opportunity to do the right thing. “Given what’s in front of us right now,” I ask. “What would be the fair way for both of us to resolve these repair costs?”

Worst case, the sellers stand pat. In that case, walk. Best case, the seller says they’ll simply lop-off the total bill from the asking price. If that happens, it’s time to shake hands and do the deal.

Compromise

Some sellers begin by offering to reduce the asking price by a very low number. They figure you’re there to haggle (hoping you won’t).

Provided the asking price minus 50 percent of the repair costs is acceptable, again, offer to split the difference.

If that doesn’t work for either or both of you, it’s time to go through the inspection report– and the probable costs of repair– line by line.

Not all repairs are equal

Keep in mind some items are your financial responsibility. Unless it involves a major repair (timing belt, water pump, adjusting the valves, etc.), upcoming maintenance regimens are always down to you.

Don’t sweat the small stuff

In particular, oil changes, tune-ups and replacing filters that aren’t necessary right now should be removed from your list. By doing this from the onset you’re showing goodwill and fairness.

Find an alternative when you need to.

If the seller claims the cost of repair listed in your inspection is too high, ask them if they know of another mechanic who’d be willing to do it for less, and the type of guarantee they will offer. I’ve seen $450 repairs with 30-day guarantees turn into $200 repairs with a full year guarantee. If the car is worth it to you, it pays to explore alternatives that will benefit both of you. It may take research and patience, but it can be done.

Tit-for tat works wonders

Finally, if you have experience repairing minor automotive issues, use that skill to create some wiggle room to help close the deal. “You know, I think I could handle that myself. What do you think about us taking off x repair? Would a price of y make it a fair deal for both of us?”

Take it or leave it

If you can come to a mutual understanding, enjoy your ride! If not don’t beat a dead horse. I like to back-out by thanking the seller for their time. Leaving a copy of the inspection report as a “gift” and telling them my final price, should they reconsider. Above all don’t sweat it. There are plenty of excellent used cars out there looking for a good home.

Let’s Recap

To get a great deal: research diligently, test drive patiently, let an expert figure out the unknowns, and negotiate in good faith. Do this and you’ll save unnecessary test drives and thousands of dollars in future repair costs.

You’ll also buy the cream of the automotive crop at an extremely fair price.

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24 Comments on “How To Buy A Used Car Part 4: Negotiating...”


  • avatar

    This was a great series Steven, thanks!

    In a half hour I’m off to look at a 2006 Miata with 30,000 miles on it. These articles, and all the talk in the leasing article about spending some money to enjoy what you like, has prompted me to reconsider my previously hardline stance on no debt ever. I figure a used toy like the Miata will make me smile more than a payment will make me frown!

    • 0 avatar

      Let me share my tale…

      A Tale of Two Miatas

      Wayne Mazda had two 2006 used Maitas on the lot. There was a gray one with approx. 60,000 miles and a blue one with approx. 30,000 miles. The gray one was priced at $15,000 and the blue one was priced at $17,000.

      I requested a quote on the blue one and offered $15,000. They instead send me pricing for the gray one at $15,000. I called them up and let them know that it’s not the gray one I am interested in, but the blue one. They e-mailed me a quote of $15,595 on the blue one. I called up and said I will buy the car for $15,000. He said it was a deal, and I had him e-mail me the quote in writing. I confirmed that it was for the blue car and checked to stock numbers to make sure they matched.

      I drove 45 minutes to the dealership, confirmed the price with the salesman and then took it for a test drive after thoroughly inspecting it. When I got back at the dealership to work up the papers I asked if they could fix a large scratch on the bumper or take another $100 off. At this point the salesman, who was very nice, went to the manager to talk things over. The salesman came back and said there must be a mistake, this must be the price is for the gray one. I showed him my e-mail, confirmed the stock numbers with him, and then printed it out. He brought it to his manager who came over to me and said that it was a mistake, but they can sell it for $15,995. He said they are losing money even at that price. I then left, angry and disappointed.

      Moral of the story… Wayne Mazda is your typical sleazy car dealership when it comes to working the final numbers; its only redeeming quality was the great salesman. Yet car dealers wonder why they get such a bad rap?

    • 0 avatar
      twotone

      Great series of articles!

      In general, I agree with most of what you said in this post. I’ve bought and sold over 30 cars in my 40 years of driving (I’m a car nut, not a dealer) and every one was a great car (Fiat Spyders included).

      Doing your homework regarding a fair and reasonable price is the important first step. If the owner is asking way too much, I won’t even bother. If it’s in the range of reasonableness, I’ll check it out with a test drive.

      I always negotiate a price, sign a buyers agreement and leave a deposit (personal check). The agreement has an inspection clause giving me a way out. I don’t want to waste my time and money on a PPI then have the seller change his price or back out of the deal.

      I don’t low-ball or treat a seller anyway I would not want to be treated. My buyers agreement is exactly the same as my sellers agreement (see below). I’m willing to pay more than “book value” for a one-owner car with all the service records. I avoid auction cars on the buy-here pay-here lots.

      Just what’s worked for me.

      AUTOMOBILE PURCHASE AGREEMENT
      AND BILL OF SALE

      A personal check deposit in the amount of $_______________ is hereby acknowledged by _____________________________, (“Seller”) received from ______________________________ (“Buyer”), for the sale of the automobile described below. Buyer has until _________ to perform a pre-purchase inspection on the vehicle at buyer’s cost. If the vehicle does not meet buyer’s approval seller agrees to immediately refund buyer’s deposit. If the pre-purchase inspection meets with buyer’s approval, buyer agrees to provide seller with a certified check in the amount of $__________ and seller agrees to return buyer’s deposit check.

      Automobile Description
      Make:
      Model:
      Year:
      VIN:
      Odometer reading:

      Seller is the true and lawful owner of the above-described automobile, which is free and clear of all liens and encumbrances. Seller has full power, right and lawful authority to dispose of this vehicle. The odometer has not been disconnected or altered while in possession of the Seller.

      The above-described vehicle is sold “AS IS” and “WITH ALL FAULTS”. Buyer hereby acknowledges, and Seller hereby expressly disclaims any and all warranties, either expressed or implied, including any implied warranties of merchantability, and neither assumes nor authorizes any other person to assume for it any liability in connection with the sale of this vehicle. Seller is not the original owner of the vehicle, does not have a complete history on the vehicle and does not warrantee the vehicle’s condition, mileage, suitability or fitness for a particular purpose.

      Buyer accepts full liability for the vehicle, damages, and any third party liability incurred from the vehicle use from the date of sale. Buyer takes ownership of the vehicle and assumes all responsibility for its transport at the time full payment is made to Seller.

      Any representations or statements that may have been made regarding the automobile have no bearing on the sale unless specifically included in writing in this Agreement.

      The laws of the State of Colorado shall govern the terms and conditions of this Purchase Agreement and Bill of Sale.

      _______________________________ ________________________
      (Seller) (Buyer)

      _______________________________ ________________________
      Date Date

      Address: Address:

      • 0 avatar
        obbop

        That’s a nifty well-worded document but I fear the vast majority of denizens here atop the Ozark Plateau, if confronted with the document, would scratch their misshapen mostly empty-of-brain-matter heads, ponder those high-falutin’ big-city words without comprehending those with multiple syllables, and reckon that the one showing said document is assuredly a threat to them and possibly a government agent of some sort with the intent of hauling them off to the hoosegow for some infringement of the law, federal, state or local.

        Not an exaggeration.

  • avatar

    Great article Steve but I have to disagree with you on one key point. I don’t believe that Kelley Blue Book values are high for late model vehicles, in fact I would wager that KBB’s values are among the most accurate in the business.

    I may work for the valuation team at KBB (no bias to be found here naturally) but if you haven’t been to our site in a while, I would suggest giving us a second look. We analyze millions of sold transactions on an annual basis and our values reflect what both dealers and consumers are actually paying in the market today.

    Now I’ll admit that our suggested retail values are on the high side but keep in mind, these values should only be referenced as a starting point for negotiation. Our private party and trade-in values are far more reflective of what a consumer can expect to obtain for their vehicle privately or at a dealership.

    With that being said, I am an avid follower of the Truth About Cars so keep up the good work!

    Alec Gutierrez
    Manager of Vehicle Valuation
    Kelley Blue Book

    • 0 avatar
      aristurtle

      In my experience, KBB is indeed trending a little low right now, at least in the under-10K range. I’ve been shopping for a used car (I prefer private-party transactions) and most have been openly acknowledging that they won’t go as low as KBB.

      Where do you guys get the prices for private party sales, anyway? Do you get the data from the “transaction price” on title transfers? Because those are frequently underreported.

  • avatar
    thejtk

    You say not to negotiate price before the inspection, but what if you believe the price is too high (high enough to not want to pay it) to begin with? Isn’t it better to come to an understanding or not on price before you invest the time/money in an inspection?

    • 0 avatar
      Steven Lang

      If the price is already far too high why would you bother with a test drive?

      • 0 avatar
        thejtk

        Because maybe they will drop the price to something more reasonable in negotiation. If I don’t even try to get it for a better price, aren’t I possibly missing out on some nice cars?

      • 0 avatar
        Steven Lang

        In my experience… no. A fellow with a pie in the sky price has usually assigned ‘sentimental’ value or recent repair costs to their vehicle.

        They would rather keep it rather than face the reality of the modern marketplace.

      • 0 avatar
        DC Bruce

        @ “thejtk”

        You have to pre-qualify your seller as someone who’s worth your time to deal with. A seller with an unreasonably high price is probably not going to be worth your time. Look at it this way: most private sellers of used cars are in the market for a replacement. So, whatever you offer them has to be better than what they can get from their dealer in a trade in or from CarMax. So, figure out what those numbers are, and then go to work.

  • avatar
    AC

    Steven, love the series! I made the comment on an earlier article that the hot used car market wasn’t necessarily resulting in me being able to sell my car. I had a Subaru for sale and took your advice and looked at Edmunds, instead of NADA/KBB which were higher. The problem? Edmunds suggests a Private Party price of $13,372 which is less than I would get by trading the car in. Subaru’s guaranteed trade program is $12,550.00, which in a place with an 8% tax rate is the equivalent of $13,560 toward the new Forester I’m looking at. Having got quotes from dealers both with and without the trade, I am confident that the price of the new car is not being inflated to subsidize the trade in. Shouldn’t I be able to do a little, even a few hundred dollars, better by selling the car on my own? Being priced around $14,000 isn’t getting anything but very lowball offers, despite being one of the cheapest age/mileage of this particular make/model/bodystyle car on eBay Motors or Autotrader across the country. I also listed it in Craigslist & the local newspaper. Not to mention that it is probably the only car described as like new that I’ve seen which is actually like new that wasn’t a sports car. Plus my OCD approach to documented maintenance should appeal to people as paranoid about such things as me. Some have mentioned financing, but it isn’t much more difficult to go to the local credit union than stop by the F & I office at the dealership. It’s not like I would object to taking the car to someones favorite shop to get it checked out either.

    I think I knew the real problem, I suffer from TTAC poisoning. Because of this I failed to realize that market demand for a wagon with a stick totals 2 people in the US, and both of them are waiting for a nice used Skoda Fabia Estate TDI with tuning by Abarth. Now that I think about it, that sounds a whole lot nicer than the Forester I was looking at.

  • avatar
    Educator(of teachers)Dan

    Come on guys, there’s still plenty of cheap cars in the collector’s market… lol :P

    • 0 avatar
      aristurtle

      There’s an idea, I can buy, say, a used 1973 Toyota FJ40 project car, with a missing engine, transmission, wheels, and doors, and restore it before this winter! Unfortunately, I’d need to budget in a kevlar vest so that my wife doesn’t immediately kill me, and those are expensive.

    • 0 avatar
      Educator(of teachers)Dan

      Fortunately my “soon to be Mrs.” is more supportive but then her dad owns a 1972 Chevy truck that’s had it’s dirty bits rebuilt a few times in the past 40 years. She’s understanding. I’m always amazed what you’ll find if you search Auto Trader Classic specifying under $10,000 and “finished” status only. But then I’m not a snob about the big iron of the late 1970s.

  • avatar
    lzaffuto

    I would add another thing. If you are buying a car from a private individual, and you have already negotiated a price after a good mechanics report/recommendation, if you decide that price is too high after sleeping on it that night just tell the person what your concern is and don’t try to bullshit them down. I had a guy we had negotiated a final price on after his mechanic told him there was nothing really wrong with the car except a couple minor maintenance items(which I lowered the price to accommodate) call me the next day while I was at the bank waiting for him to arrive. He said he did a carfax the previous night and even though he already knew how many miles were on the car when he first came to look at it said that he was uncomfortable with how many miles I put on it in the short time that I owned it and tried to knock $1000 off the price. Pissed me off quite a bit.

  • avatar
    MrWhopee

    Wow, I know used car prices are high right now, but $35,000 for a (really old) Tercel? Where’d you snap that picture? I’m thinking of some countries that use dollar for currency (Zimbabwe?), but the license plate seem American.

    “Call me!”? I wonder if the buyer got any call at all…

    Steve, how’d you begin negotiation with [i]that[/i] (obviously delusional) guy?

    • 0 avatar
      obbop

      $35,000 for a (really old) Tercel?”

      Sniff.

      How terribly sad.

      What has happened to “sentimental value” within the USA?

      How many secretive kisses and sundry gropes have occurred within that cars’ confines?

      Perhaps an entire mini-herd of vile spawn originated within.

      Of course, the “obo” does allow some room for the yes, excessive asking price to be nudged downward but… sniff…. the events that took place within the car may be enough to fill a shelf-full of romance novels.

      Or X-rated movies.

    • 0 avatar
      M 1

      “I wonder if the buyer got any call at all…”

      Unless his phone number is “$35,000.00″, probably not.

  • avatar
    HiFlite999

    One factor not mentioned is the case of an owner in love with his car, but forced to sell by circumstances. If he senses that you’re in love with the car too, and have the skills/resources to take good care of it, he may cut you a deal. This doesn’t work for “normal” vehicles, nor is it something easily faked,but letting such an owner know that you’re a car guy doesn’t hurt.

  • avatar
    sulpur

    I think this is one of the best technique to buy a used auto car which could make some suitable changes in the parts of that vehicles.First thing which should be checked for the auto parts is the durability of that part and the second is its functioning.
    used truck parts

  • avatar
    Elijah820

    In the current period of economy a middle class family doesn’t dreams to own a car so its better to take some advantage from a used car with a rare and effective price which is affordable, so I think these instructions are really helps a lot for getting a used car with a negotiable rate with better quality.
    used auto parts

  • avatar
    MichaleRideaux

    Superb article! Thanks man, for sharing these tips. Buying a used car part can be a miserable job if you aren’t doing it in a right way. Here are few more tips to keep in mind :-
    1.) Be careful as there are lots of scams going on these days.
    2.) Avoid dealers who aren’t giving you warranty.
    3.) Look out for a reliable dealer.
    4.) Make deal only from a reputed dealer.
    5.) Know about part’s history and its performance.
    I‘ve had an experience of buying used engine from this site called http://buyusedengine.com/used_engine.php and the deal was fair and the engine is working pretty well too.

  • avatar
    Matthew Williams

    I really needed a new engine for my car but all the quotes I was getting were way out of my budget. I looked one evening when I drove past Joliet U-Pull-It’s sign board… I was able to buy a good engine at a great price! I’ll definitely be checking them out again for my spare part needs, plus they have a website! Here’s a link if you’re looking for car parts like I was http://jolietupullit.com/.


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