Negotiating any car purchase can seem intimidating. Between inflation, pandemic recovery, and supply chain issues, there’s not a lot of inventory to go around right now. As a result, you may not get the wiggle room you’re used to when you’re shopping for a used vehicle.
Dealers are charging more for used vehicles because they’re paying more for them themselves, while private sellers are expecting more for their vehicles to match market values and to offset the higher prices they know they’ll have to pay for their own new cars.
That said, there’s always room for negotiation in car buying. Here’s how to make sure you get the best deal on the price of a used car.
How to Negotiate Your Next Used Car
- Do Your Research
- Know Your Budget and Search for the Sweet Spot
- Make the Most of Your Trade-in
- Timing is Everything
- Learn a Few Negotiating Tips
- Find Other Ways to Save Money
Step 1: Do Your Research
Searching for your next car starts at home. Spend some time making sure you know what car you want, figure out a realistic price range for that vehicle, and your budget. Knowing the market rate for similar vehicles to the one you’re considering is key to getting a good deal. There are plenty of online tools that can help you assess market value in detail based on model year, body style, trim level, colour, and more.
Shopping on CarGurus makes it easy to understand a used vehicle’s value. CarGurus’ used vehicle listings use proprietary Instant Market Value data to calculate a deal rating ranging from Great Deal to Fair Deal or Overpriced, so you’ll know at a glance if the vehicle you’re considering is above or below the market average relative to similar cars.
If you’re buying at a dealer, be sure to research them as well. Check the online reviews to see what the public perception is, and how other customers have been treated by the salespeople and other staff. You’ll quickly learn whether this car dealership is one you want to do business with. CarGurus includes a dealer rating system in its vehicle listings, which puts this information front and centre.
Step 2: Know Your Budget and Search for the Sweet Spot
The best way to make sure you don’t overpay for a vehicle is by being self-aware and clear about your limits. Go into the process with a firm upper price cap, and refuse to budge, but appreciate that this approach can be limiting. A lot of factors go into a car price such as its age, the odometer reading, condition, and desirability. Knowing an appropriate range that you’re willing to work within, while being strict about your upper limit, will protect your budget and keep your options open.
If you can afford to shop for something newer, then three-to-five-year-old vehicles tend to fall within the sweet spot for value. Depreciation starts to level off when a vehicle is about three years old, and some (but not all) vehicles of that age will still be under the new vehicle warranty. Researching the warranty terms on the car or truck you’re considering, and opting for a vehicle that’s still under warranty if you’re debating between multiple models, could save you money down the road.
Step 3: Make the Most of Your Trade-in
If you have a vehicle to trade-in as part of your buying process, research its market value just as thoroughly as you did for the one you hope to buy.
As a first step, it's easy to secure an online offer to find out how much your car is worth. You can sell you car 100% online with CarGurus, and find out how much it's worth with just a few simple clicks.
Alternatively, if you're considering trading in your car to a dealer, you may be able to talk them down on your next vehicle’s price, especially if your old car is in a desirable category – pick-up trucks and SUVs are good examples.
As a final option if the online offer or dealer’s trade-in value doesn’t come close to what you think the vehicle is worth, then consider selling it privately so you have more money to put down on your next vehicle, particularly if you’ll need to take out an auto loan. A larger down payment will reduce your monthly payments, as well as the total amount of interest you’ll have to pay on your loan.
Step 4: Timing is Everything
Some of the old rules for buying a car still apply in the digital age. For example, if it’s a convertible you’re after, you may get a better price by shopping for it in early winter. Shopping in the spring, when demand is higher, may mean sellers are less flexible on price. Dealers may also be more willing to negotiate on certified pre-owned vehicles toward the end of each month or the end of a quarter if they need to hit sales targets. This doesn’t work as often for used vehicles, but some car dealers may have quotas on these as well, so it’s worth a shot.
Step 5: Learn a Few Negotiating Tips
When you’re ready to make an offer, start the negotiation process at a lower price than the asking price and below where you hope to end up without resorting to a lowball number. Be firm and confident but polite, and make it clear that you’ve done your research and you know the car’s market value. When you get your counteroffer, be upfront and point out any factors that may sway the situation in your favour, such as if your pre-purchase inspection found minor damage that will need to be repaired or if the vehicle has been on the market for a while (CarGurus listings disclose this information).
Stay focused on the negotiation for the best price and don’t be veered off-course by distractions or unnecessary haggling, especially with talk of monthly payments. Car salespeople sometimes play with financing terms to get you a lower monthly payment, but this may obscure the fact that the overall price is higher than you wanted to pay. And don’t be afraid to walk away if you sense that the seller is being stubborn, unreasonable, or intimidating, and not giving you a fair price.
Step 6: Find Other Ways to Save Money
If you’re not getting anywhere with a deal on a used vehicle, consider some factors that might not change the sticker price but could save you big money in the long run.
While the focus will tend to be on the vehicle’s outright purchase price, don’t forget that you can also negotiate finance terms such as the interest rate and the car loan’s duration. Securing a lower interest rate in particular can save you hundreds or thousands of dollars over the life of your loan.
You may also be able to get some add-ons thrown in with a purchase, such as a new set of winter tires, complimentary oil changes, or a no-cost warranty. Don’t turn your nose up at these: this doesn’t save you money right away, but it will save you money later, and that all adds up.
Review the vehicle history report (CarFax is one example) and service records, test drive the vehicle yourself, and get a pre-purchase inspection to ensure any issues have been properly dealt with, before signing on the dotted line. These extra steps can save you from enduring major headaches later.
Most importantly, don’t get too attached to a car early in the process, and don’t be afraid to walk away from a purchase if something seems off. There are plenty of cars out there, and being confident you’ve purchased the right one at a good price is worth the wait.