How to Negotiate a Used Car Price - Clever Customer

How to Negotiate a Used Car Price

Unless you were the captain of the debate team in high school, you probably aren't looking forward to the negotiation phase of buying your next used car. The process will go differently if you are buying from a private party seller or from a dealer. We'll explain how to negotiate a used car price in both cases. There is some preparation work you need to do in either case. Before you start negotiations, even if you expect things to go smoothly, do this homework first.

How to negotiate a used car price

What to do Before Negotiating a Used Car Price

Know the Value of the Specific Vehicle

If you've followed our process, you know the vehicle very well.

You have looked at the value using online references like Kelley Blue Book. You've doubtless combed several ads and have an idea of the asking price range of the vehicle. For more information you can look at completed sales on eBay Motors, using the Advanced search option and searching for Sold Listings only.

You also have inspected the vehicle, test driven the vehicle, and had a mechanic perform a pre-purchase inspection on the vehicle. You know the cost of repairs the vehicle needs. You also have the vehicle history report so you know if it's been in any accidents, if it was used as a rental car, or any other shadowy things in its past that you can use as negotiating points.

Of course you'd like to get the vehicle for as little money as possible, but it's unlikely that you'll pay below the low range of what the vehicle is actually worth. The seller knows what it's worth as well, and expects to receive that value for it.

Before you go, have two numbers in mind. The first number is the most you will pay for the vehicle. This is where you will walk away if you can't meet or beat it. The second is a low reasonable value for the vehicle. This is where you will start your offer.

Collect Facts in Writing

Prepare a folder or even simply paper-clip together some facts that you can bring with you and use to support your negotiations.

  • Blue book value
  • Comparable vehicle sale listings
  • Repair cost estimates
  • Quotes from other dealers, if you're working with a dealer.
  • Anything from the vehicle history report you think may work in your favor

Negotiations can get emotional. In the case of a dealership, you'll be up against a professional negotiator. They have a large arsenal of tactics. But no one can argue with facts. Facts are what you need. Real, on paper, in writing facts.

If you are buying from a dealer and have a trade-in, you need to collect the same information about your car so that you can make a case for the price you want for it. Before you go, decide at what price you would rather sell the vehicle yourself. That's your lowest trade-in price.

Have Viable Options

If you aren't able to walk away from a negotiation, you will lose every time. Read it again: If you aren't able to walk away from a negotiation, you will lose every time. If you believe you have to do this deal, the seller will capitalize on that. There are plenty of used cars for sale in every area at any given time.

That might not be enough reassurance for you that it's OK to walk away though. Have specific cars in mind that are for sale now that you can research or have researched. This way, if negotiations aren't going your way, you can walk away knowing that you aren't losing. You're picking a better option for you.

Get Pre-Approved Financing

If you are working with a dealer and plan to finance the vehicle, get pre-approved financing. It's simple to do. Shop your own bank, or preferably local credit unions. Getting pre-approved financing does not mean that you are taking out that loan. It means that you have options if things aren't going your way during negotiations. That's power you have that the dealer must respond to in their offer. If you don't have financing options, you'll have to take whatever they decide to give you. That offer is guaranteed to work for them more than it works for you. Getting pre-approved can be done completely online, and take 30 minutes. You're the one spending the money here, you take control.

Getting pre-approved financing is especially important if you are a first-time buyer or have poor credit. The dealership has programs for people in these categories, and they are not favorable to the buyer at all. They know you'll have a hard time getting financing, and they'll promise to make it so easy for you that it will sound too good to be true. Know that it comes at a hefty price, either in the interest rate, term of the loan, fees, or price of the vehicle.

It's simple, the one with the money makes the rules. If you have pre-approved financing, you have the money. If you're relying on them to get you financing, they have the money. It's worth doing.

Set Your Expectations, Plan Your Demeanor

Your goal is to get a good value. It's highly unlikely that you'll get the steal of the century. The seller needs to get their value out of the vehicle. There are other buyers, and from their perspective you may not be the one. They are OK with walking away too. You may not get exactly the number you want, and that might be OK. Don't focus on winning the negotiation at all costs, focus on the big picture.

Be polite and reasonable. You can be firm and still be civil. Do not be obnoxious. Try to keep emotion out of it, even if you love the car. Stick to facts. This is a business transaction, exchanging money for goods.

Don't start with a “take it or leave it” offer. No one wants to be told what they're going to do, including sellers. They will not work with you. They may in response adopt the same attitude with their price. Then you are at an impasse when a deal could have been made.

If you are buying from a private party who has had the vehicle for a long time, understand they probably some emotional attachment to the vehicle. Being rude or brash about the vehicle's condition or price will make them feel like it wouldn't be going to a good owner, and they will walk away.

Pre-approved auto financing

How to Negotiate a Used Car Price With a Private Seller

Negotiations with private sellers are usually fairly short and simple. Ask the seller what his lowest price is for the vehicle. If it's lower than your number or right around your number, then great. You're done. Shake hands, pay, get the keys, and sign and notarize the title.

If their number is high but still within the range of values for that vehicle, it's time to break out the facts. Show the blue book value of the car. Show the completed sales of similar vehicles. Show the listings for similar vehicles. Then drop that number with the repair cost estimates you have. Walk them through the logic you used to arrive at your number.

If they stand firm or counter-offer with a number that's still far too high, try coming up a little bit on your number, maybe 10%. Let them respond. It's OK to be silent during negotiations. It's often a winning tactic. Wait for them to counter-offer again. If you're still too far apart, it's probably time to walk away. Leave your name, number, and offer for them. They may reconsider depending on what type of interest they are getting from other potential buyers.

If you're getting close, come up maybe another 5%. The smaller increment is a sign you're reaching your absolute cap.

If you come to an agreement, make sure to complete all of the paperwork required in your state with the seller that day. Do not allow the seller to say he'll take care of it without you. Make sure you have in-hand all of the necessary paperwork when you leave. Typically this includes the title, with the seller's signature notarized on the back, and possibly a Bill of Sale as well.

How to Negotiate a Used Car Price With a Dealer

Negotiating with a dealer is more complex than with a private party. You need to be sharp throughout the entire process. They often drag it out for hours in an effort to get you concede to some element of the deal. Be prepared to spend a lot of time there. These people do this all day every day. They know what works and what doesn't. They're professional negotiators, and every deal they make is a winner for them in at least one respect. If it isn't, they don't offer the deal.

Negotiate Each Element of the Deal Separately

These are the elements of the deal you will be negotiating. The dealer of course wants to make money on each one:

  • The purchase price of the vehicle
  • The price they pay for your trade-in, if you have one
  • The financing terms, or profitability of the loan
  • Add-ons – Extended warranties, window tint, undercoating, and so on
  • Miscellaneous fees

The first thing they will ask about is what you want your monthly payment to be. That is the worst place for you to start. What the dealer wants to do is to package everything together in a black box that you can't see into, and just show you the monthly payment. They want to obscure the details of the price of the vehicle, what they'll pay for your trade-in, the interest rate of the loan, the term of the loan, miscellaneous fees, and add-ons.

Insist that you first address the “out-the-door” price of the vehicle. This means the selling price, taxes, documentation fees, less incentives and rebates, everything it would take for you to pay in cash and walk out the door with the vehicle. This is the value you researched. This is the number you know best. Negotiate that number first. Do not focus on the monthly payment, at least not until the time comes to negotiate financing.

Negotiate the Price of the Car You're Buying First

This is where you stand to make the biggest gains. And because nothing else in the deal has been negotiated, the dealer may be more flexible on the price with the intention of making up for it in another element of the deal.

Try to get them to give a number first. Ask for best price on the vehicle. You want to get an idea of where they will start. If it's anywhere near reasonable, counter-offer with an offer below your number but at the low end of the reasonable range for that vehicle. Your low number may have to be the first offer. They'll have to take the number to a manager and the delay tactics begin. They'll come back with another number. Counter a little higher, again maybe 10%, and that number will go off to a manager.

This will go on several times. Decrease your increments each time. Do not go over the high number you set for yourself in advance. You have options. They also have options because you haven't yet discussed financing and trade-in value, so that may make this part easier to complete. They will try to get the other elements of the deal wrapped back into the negotiation. Stand firm on discussing the vehicle's out-the-door price first.

Negotiate Your Trade-in's Price

Once you have that price set, if you have a trade-in, negotiate the price of your car. They will call it “trade-in value” to psychologically soften the fact that this is actually “price”, not value. If you sold the same car to a private party, which you still have the option of doing, this is the cash you would walk away with. Don't go below your minimum number, or at least not significantly. They may need to gain a little something in return if you negotiated a great price.

Facts will help you here too. If the car is one-owner, has low miles, has service records, recall work is done, is already clean, and so on, these facts will help you in holding your ground.

Negotiate the Financing

Only now do you actually know how much money you need to finance. You know the purchase price of the car, less the price you got for your trade-in, and any down payment you are making. Because you are a Clever Customer and took our advice, you already have financing arranged. You don't need their financing deal. However, it is completely worth your time to see if they can get you better financing.

Before you let them know you're pre-approved, find out what financing they're willing to offer. It may be significantly better. If they see your terms they know they only have to offer a little better. Once they've made an offer, add it up. The monthly payment amount multiplied by the number of monthly payments is what this loan will cost you, including the car that comes with it. You could also compare principal, interest rate, term, and any origination or other fees.

The nature of loans is such that the shorter the term, the lower interest rate you will pay, and the higher the monthly payment will be than a longer term loan. While the monthly payment is higher, you're saving money by paying a higher monthly payment. Get the shortest term loan as you can and still afford to keep current on the monthly payments. We're digressing into personal finance here, but it's sound advice.

Also, make sure there is no prepayment penalty on the loan. This means you can pay off the loan early and not have to pay any additional fee to do so. You may not picture yourself paying the car off early at this point, but it may happen. If you sell or trade in the car before the loan is over, you are paying it off early.

The Contract Person

Once you've agreed on all the terms of the deal, you'll be handed off to another person. This person is the finance and insurance person. They have a small office with walls and a door, unlike the sales cubicle you just came from. They will say they are just there to finish up the paperwork, implying they don't really have a stake in the deal. In reality, this person will make plenty of profit for the dealership through add-ons and sometimes crafty financing numbers on the contract.

The finance person will ask if you want an extended warranty, and various other add-ons. Be judicious. An extended warranty may be worthwhile, but it depends on what's covered and what's excluded. Other add-ons like window tinting, undercoating, clear-coat, a trailer hitch, and the like can often be purchased later for less. They don't necessarily need to be part of this deal. If it's an item you haven't had time to research and shop for properly, then it's probably not a good deal for you.

Once they have your desired add-ons, they will print out a very long contract, asking you to sign and initial in various places.


Take your time. Read the contract. It's legally binding.

  1. Make sure everything on the contract matches what you agreed to with the salesperson. Vehicle price, trade-in price, incentives, rebates, financing terms, everything. Break out your phone's calculator app and do the math yourself just to make sure the numbers on the contract work out.
  2. If the salesperson said they would fix something, even minor, or add something, even minor, it needs to be written down on the contract. This person wasn't there when the salesperson said it. No one will have any idea what you're talking about as soon as you sign the contract. That advice comes from real experience.
  3. Make there is nothing there that wasn't agreed to, or that is new information to you which you do not agree with.

They may seem very annoyed that you don't just simply sign and go. It's a tactic. Don't sweat it. You're the one spending thousands of dollars. They work here and don't really have to be someplace else right now, which is how they sometimes act.

If the finance person has to make changes and reprint the whole 20 page contract 5 times to get it right, that's fine by you. You're taking on a substantial financial and legal obligation here, they are not.

Remember: No matter what anyone at the dealership said to you, if it's not on this paper, it's not part of the deal.

Congratulations on Your New-To-You Car!

If you followed our steps, you'll have no buyer's remorse, no second thoughts. You know exactly what you got in terms of condition and price. You've made an informed decision, which sets you apart from so many consumers. We're glad you're a Clever Customer. If you've found our process helpful, please let us know on Twitter or via email, but more importantly, share it with a friend!

Now that have the keys, there are still a few items for you to complete:

  • Let your insurance company know you bought the car. They will need the VIN.
  • Once it's on your insurance, register it in your name.
  • Schedule any urgent repairs which were reported in your pre-purchase inspection report.
  • Schedule any open recall repairs for the vehicle
  • Fill it up with gas, buy the air freshener of your choice, and enjoy your car!

Used Car Buying Guide

The Proven Used Car Buying Process for Clever Customers - Follow our detailed steps, and you'll be confident in your used car purchase. Avoid that sinking feeling of buyer's remorse. You'll know exactly what you bought, and that it was the best option for you.