By on August 24, 2012

 

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 if a comparable vehicle was sold there at ‘No Reserve’.

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. Therefore inspect first, and negotiate last.

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 and you’re not interested in a long negotiation, 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 should not 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).

If the first offers by both parties aren’t getting any traction, 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 instead? 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.

[Part one of our used car buying guide is here, part two is here, and part three is here.]

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


  • avatar
    twotone

    Great advice!

    Researching a fair and reasonable price range for the car is the first essential step.

    One step I do prior to getting a PPI, is to sign a simple sales agreement describing the vehicle, stating the price and with a back-out if the inspection does not meet my approval. I also give the seller a personal check for a few hundred dollars to hold the car for two days with the understanding that I will pay by cash or certified check if the deal goes through. Similar to buying a house with an earnest deposit prior to inspection.

    I don’t want to spend my time and money on a PPI, then have the price increase or he decides to sell the car to someone else (ask me how I know this).

    Keep the good advice coming!

  • avatar
    Ubermensch

    While all of these articles have good advice, they all depend upon the seller being extremely patient and generous with their time. I’m not that sure you will find a lot of sellers willing to tolerate all of these steps especially in the low end of the market. Someone unloading a sub $2000 car is not going to want to wait around all day for someone to take their car to a mechanic and go over it with a fine tooth comb. Used car dealers may also not be inclined to let you take the car to another mechanic. Of course I don’t live in a major urban area so my choices are more limited than many others who have their pick of cars, especially foreign and luxury. Many of the cars I am in the market for can only be found several hours away which makes negotiating and inspecting much more difficult, especially when a trade is involved.

    • 0 avatar
      danio3834

      You make an excellent point. The advice given about the inspection I would generally apply to a more valuble used vehicle in the $5000 plus range.

      As someone who buys, fixes and sells a lot of bottom end rides (but not junk), having someone want to take a $2500 car somewhere else to have it inspected is a waste of my (and their) time.

      Do us both a favor and bring your car buddy or mechanic with you to look at it. I would be more than happy to jack it up or put it on the hoist for you as I confidently do not sell junk. Because of that, I expect to get fair value for what I sell and not get jerked around.

      People who make lowball offers via email or text are a waste of time. Heck, even legitimate sounding people do not show up 8 times out of 10.

  • avatar
    slance66

    Steve,

    Thanks for this series. I think it’s very helpful, especially for private party sales.

    I’d be curious what you’d advise for used car shopping from major dealers, including CPO models. I’m sure the negotiation tactics are fairly different. I’ve found some independent dealers locally simply go to the auctions, buy off-lease inventory and sell it for a few hundred over auction, plus any update costs (tires, brakes etc.).

  • avatar
    morbo

    Dealers. Last time when I bought my used Ranger in ’06 from the dealer

    Me. 3yr old off-leade Ranger Edse, V6 fully loaded with extended cab, power options, and bed package. I’ll give you $10K plus my 160,000+ mileage TBird with 3 out of four transmission gears and most of the radiator functional.

    Delaer: We’ll part with it for $13K plus trade.

    ……3 hours of me repeating $10K, plus walking out of the dealership twice to be followed by the manager swearing a best and final offer…

    Delaer: OK, you win $10K. Here’s the paperwork

    Me: Oh, I meant after $10K after taxes.

    An hour later I had my truck for $10,200 after taxes. Why in God’s green Earth does it always have to be like that? Why can’t they just agree to a decent price and be done with it. Why do I have to waste 2-3 days every goddamn time I want to buy a car from the dealer?

    • 0 avatar
      Gannet

      You answered your own question. With extreme persistence you moved them, what, $4k? The great majority of buyers won’t do that. The chance of getting all or most of $4k is worth the investment of a few hours on their part. It’s a very high $/hour.

      And you thought so too, or you wouldn’t have done it. :)

      • 0 avatar
        Robbie

        Exactly… this is also why the >$300K family income people in my area drive their cars for a decade or more and until they look terrible: they do not want to have that extreme persistence that is required to get a normal price from the dealer, and even though they have the money in the bank ten times over, refuse to overpay.

    • 0 avatar
      cavalmi

      They do this because they offer very little of value except their ability to get you to part with more money than the car might be worth. This is true of new car salesmen as well. They generally don’t know anything of value about the product that they are trying to sell and will actually just make some things up or lie. The only time that I bought a used car from a dealer, they lied to me twice. The first lie was that, over the phone, they said that the car has 75000 miles (when it had 89000 miles). The second lie was that they would take a credit card for the full value of the car. I have not been to a used car dealer in 16 years, and whenever I buy a new car, I only use the internet quote system.

    • 0 avatar
      qest

      You paid $200 more than you wanted. That’s $66.67/hr which is a nice rate for someone with no education.

  • avatar
    wsn

    That’s why I would never buy a used car. My first car was a brand new Civic, with 60% help from parents. Selling that Civic at the 8th year (to a private party) was quite smooth.

    So my advice would be, stick with Toyota/Honda compact/midsize. Buy new and don’t expect to make a fortune when selling. And you will be fine.

    • 0 avatar
      twotone

      Buying a new Asian car is good advice for people looking for a basic transportation appliance. I often tell my non-car friends to take this route.

      Being a car guy, however, I’ve been driving BMWs, Mercedes and Audis for the past 15 years for much less than the price of a new Honda or Toyota (actually less total per-mile cost considering reduced depreciation). They have been just as reliable, but much more fun to drive.

      If you are just looking to get from A to B, buy a new Asian car. If you are looking for some fun on the way, buy a nice used German car and enjoy the ride!

      • 0 avatar
        ciddyguy

        That’s generally true, except when you buy certain Mazdas.

        They have the fun to drive quotient that a current Civic, Corolla, Camry and Accord seem to lack.

        I’m talking the Protege, Protege5, Mazda3, Miata and RX7/8

  • avatar
    Felix Hoenikker

    Steve,

    I like your method, but it won’t work in certain situations particularily for cars priced significantly under market. Case in point, about 10 years ago I was in the market for a mid life crisis mobile. One thing I was certain of was that I was not going to over pay for a toy car like some of my friends who were shelling out $40K for new BNW two seaters with an M badge. Nope, wasn’t going down that road.
    I ended up stumbling on an internet listing that had swept up an privte sale ad from a newspaper in Tom’s River NJ. As luck would have it, I was the first caller. Even more lucky was that the car was stored about an hour and a half away from the seller, but closer to me. The next day, I visited the seller’s son who stored the 1974 Mercedes 450 SL in his garage. The price was about half of similar advertised cars. I took a quick ride and put down a deposit even though I knew the car had a few age related issues.
    I called the seller and arranged to pick up and pay for the car a week later. During that time, I cross shopped similar models and confirmed that the heavy discount. Meanwhile, the seller told me he was receiving at least 10 calls a day which didn’t surprise me. Since the car was located over an hour away, I didn’t have time to revisit and arrange a PPI, but had to go with my instincts after talking with the owner and meeting his son.
    It worked out very well and I was able to repair all of the issues for under $1K.
    All in all, I was very happy with the deal.

    • 0 avatar
      danio3834

      I agree completely, however I hazard people who decide to go with their gut to consider their experience level.

      For examply I buy cars all the time at various auctions without so much as sitting in them. From my experience and about 5 minutes looking at a few key things, I can make create a worst case scenario (needs and engine or trans repair) and factor this into what I’m willing to pay. This is really built from experience.

      What you did with your car sounds to be the same, found a low starting point so you could afford a few surprises. More often than not, you luck out. You just try not to let the once in a while problem child get you down.

    • 0 avatar
      Steven Lang

      If you already know what you are doing, and find something nice at 50 cents to the dollar, then time will become the enemy.

      For most other folks the ‘unknown issue’ is the enemy. I designed this car buying series with that in mind.

    • 0 avatar
      packard

      Felix is right on point. Sometimes a seller underprices his car. In that case, you need to act fast and must use your skills in evaluating the condition of the vehicle without a PPI. This situation with underpricing often occurs with older sports cars. You can minimize your risk in these cases by researching the car and known weak points. If the owner has owned the vehicle for a substantial period of time and has maintenance records- these are good signs.

  • avatar
    Polar Bear

    Isn’t this haggling just a charade? I sold something on the net today. I wanted 350 for it. I put the asking price as 400, let the buyer “negotiate” down to 350 and sold it.

    I only do this because buyers expect some haggle room. But it is a waste of time. I will not sell for less than I have decided. No smooth talk can change my “real” price.

    Did anyone try selling a used car privately with a fixed, fair price? How do people react?

    • 0 avatar
      Ryoku75

      When it comes to selling cars with a “fixed, fair price” it means nothing, every conversation will go like this:

      Steve: I have a 1992 Volvo 240 with 150k on it for $1500, its been well maintained and largely highway driven. Its a fine car but the AC dosen’t work. Firm on price.

      Mr. Hagglesworth: Does the AC work? Would you take $400 for it?

      Sent from my Iphone Blackberry

      I know this from talking with many, many people on craiglist, be it cars or cards everyone jumps to haggle.

      • 0 avatar
        burgersandbeer

        Too funny. And true.

      • 0 avatar
        Polar Bear

        The advantage (in theory) of fixed price is that when everyone else is advertising their 10k cars for 12k to have haggle room, you can advertise yours for 10k and make it look like a better deal, attracting more interested buyers.

        Obviously the weakness is if buyers will haggle anyway because they were not paying attention to your “fixed price”. Or they don’t care what you say. Which is why I asked if anyone had tried it.

  • avatar
    redmondjp

    Speaking as one who recently sold an older vehicle on Craigslist, I can’t even believe the number of idiots who tried to argue price before even so much as laying eyes on the vehicle.

    Me: posts ad, price $1800 (but will take $1500, you have to leave some wiggle room in your price, esp. on CL as buyers all expect a ‘deal’)

    Them: emailing back, “wil u take 1200?”

    I finally stopped throwing pearls to swine and simply started deleting these types of responses. Politely suggesting that they should come and see the vehicle first didn’t seem to register.

    • 0 avatar
      danio3834

      Definitely the most frustrating part about selling anything privately anymore.

      I always price anything I sell fairly with a bit of wiggle room as I would expect any reasonable person would.

      When I buy I won’t even look at an ad that is priced WAY higher than what I know it’s worth.

      I thought about just inflating my prices anticipating the inevitable 50% low ballers but in the end I decided that there are still decent buyers like me out there and I would rather attract and deal with them and ignore the bad prospects.

      • 0 avatar
        Ryoku75

        I’ll confess to early haggling myself, I decided to stop after a Dodge Aspen seller told me “Don’t talk price until you see the car!”, don’t ask why I was looking at a brown over brown Aspen.

        Heres my big question though, when did all of this early haggling start? If anything I could blame the many, many modern reality shows involving buying and selling stuff, they always devote good time into “intense” haggling parts that just make me sick.

      • 0 avatar
        burgersandbeer

        @Ryoku75

        Wheeler Dealer makes fun of this process a bit in the negotiation part. After one or two rounds Mike often says “ok, we both knew we were going to end up here, so let’s wrap it up. How about $x,xxx?”

    • 0 avatar
      bikegoesbaa

      I don’t mind lowball offers, as long as they’re backed up by an actual willingness to buy the vehicle at the stated lowball price.

      I’d much rather find out a prospective buyer’s price in 20 seconds via email than have to spend an hour meeting with the dude and showing the car only to find out later that he wants it for 60% less than I’m offering.

      I don’t get why it bothers people. Let’s say that you are selling a car and asking $3k.

      I’m looking to buy that same car, but the most I’m willing/able to pay is $2k.

      If you are flexible on price, we might be able to make it work. If it’s not, then any further discussion between us is a waste of time.

      Why not establish everbody’s pricing flexibility and expectations up-font at first contact, so that we can both save a trip and some time while I drive over and inspect a car that I’m never going to pay much more than $2k for?

      • 0 avatar
        danio3834

        Your example isn’t at all what upsets me. That is a real world example of deal making. Chances are if I’m listing a car at 3k, I’ll be happy to meet you at $2500.

        It’s when I’m listing a car at $3000 and get a flood of e-mails and calls offering $1200 with no justification that I get pissed off.

        It’s a waste of my time to sift through them to find the serious buyers and insults the time and effort I put into my cars before I sell them.

  • avatar
    Polar Bear

    In the old days just a few people would try to haggle in the phone before they had seen the car. I aways replied “You want to buy it unseen?” But with smart phones and text messages this has become an epidemic. I ignore them. I din’t think they are serious buyers anyway. Some try bazaar style haggling, sending me a text message out of the blue offering me half the price. Would they show up if I said yes? Probably not.

  • avatar
    parabellum2000

    The entire time I was reading this, I kept having flashbacks to episodes of wheeler dealers. Next time I buy a used car, I will need all my self control to keep myself from sticking out my hand, making a low-ball offer, and asking the seller in a British accent, “come on, let’s have a deal”.

  • avatar
    Ryoku75

    In part 1 of this you said to “Forget Ebay”, but now you suggest to check out the “sold for no reserve” cars? Did you change your mind on that over the course of time?

    I love the picture for this, partially because 4-door third gen Tercels are rare and thus “valuble” in some peoples minds, and partially because I’m selling a Tercel from around that era just this day.

    These are some good tips, that “inspect first, negotiate later” is something that most Craiglist shoppers aren’t aware of.

    • 0 avatar
      Steven Lang

      Good question.

      The issue with Ebay is the lack of overall data.

      Almost all of the vehicles listed are either classified ads or with reserves. the former are simply done to being people to the dealership. The later tends to depress the price reached, and is also used more as a marketing tool than an actual auction mechanism.

      If you are looking at a common good, let us say an 8 year old Camry, there isn’t that much opportunity to get a premium return over the local market. This is due to the fact that there are plenty of other substitutes available in that marketplace.

      A 20 year old Peugeot would be an entirely different matter. If we are to assume a common vehicle, then Ebay’s no reserve prices represents a slight premium price for what is usually marketed as an above average product.

      To be blunt, those Ebay prices work if the vehicle you are buying is common and readily available in your market.

  • avatar
    Detroit-X

    Are you going to have Part 5, The Deposit?

    While selling a car, I once had a clown give me a post-dated check for $100. I didn’t notice it was post-dated when I got it, the teller didn’t realize it was post-dated when she cashed it, and oh-boy, was the bozo surprised when he asked for his now-cashed check back. (And it even could be that he mistakenly put the correct date on it, for all I know.)

    I learn quickly. After that, I NEVER accepted a deposit. I never agreed to hold a car. I just say my objective is to sell it. The first person with $xxxx cash gets this car. Simple. That always kicked the serious buyers into gear to get moving, and I never lost a sale.

    • 0 avatar
      Steven Lang

      The only way to do a deposit is to have the paperwork signed, or to have the deposit be non-refundable.

      Some people who make deposits, have a tendency to disappear and shop around long after they have made the supposed commitment.

      Buying a vehicle should be simple. Either you want, or you don’t. Few things are worse than dealing with a modern day Hamlet.

      • 0 avatar
        qest

        In PA, there’s no such thing as a non-refundable deposit on a car. On the one hand, dealers can’t screw people, on the other, good luck getting them to order something unusual or expensive for you or to install accessories before you take home the unaccessorized car.

      • 0 avatar
        burgersandbeer

        I don’t think it is as simple as “you want or you don’t.” You won’t know if you want it until you drive it. Lots of ads say something along the lines of “no joy rides” or “no tire kickers.” How do you separate a joy ride from someone who is legitimately interested, but hasn’t driven that model of car before? Maybe they drive it and for whatever reason it isn’t what they hoped.

        Too many sellers expect everyone that shows up for a test drive to have a certified check for the asking price already in hand.

      • 0 avatar
        danio3834

        I agree 100 percent. I will accept a non-refundable deposit with the understanding that it is non refundable, otherwise what’s the point?

        Like you stated, the deposit is not always a guarantee they will buy. I have found in multiple instances that it ended up being a compensation for a waste of my time when the supposed buyer left a $100 deposit and was never heard from again!

  • avatar

    The internet has made it so easy to evaluate car values in today’s market. You can easily do your research online, which not only saves your time and money, but als helps you in having knowledge about carb parts. You can also ask your friends for referral.


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