Skip to content

Instantly share code, notes, and snippets.

Embed
What would you like to do?
Negotiating a cash purchase of used car from a dealer

Negotiating a used car purchase from a dealer

(assuming you are paying cash)

Preparation

  • Arm yourself with information.
    • Kelly blue book value. Helps inform what a reasonable price will be.
    • Black book value. Helps define the dealer’s bottom price, what they would acquire the car for in a trade-in.
    • Common car problems and their cost.
  • Go at the end of the month. Commissioned sales people are more likely to make a deal if this sale helps them squeak into a higher bracket before the month is over.
  • Know the car you want before going in. Prevents you from settling or overbuying.
  • Know the price you want to pay before you walk in.
  • Be free to walk away.

Talking Price

When talking price, a dealer will likely use the 4 square model, illustrated below. These are the four areas where the dealer can make money, and that you can work to get a deal.

MSRP  |  Trade
----------------
Down  |  Monthly
  • Do not tell them your budget.
  • Do not tell them you are paying cash. This does not mean you should lie if they press the question. But if you can avoid revealing this, keep the information to yourself. Dealerships make money on financing; if they know you will not be financing they will try to make money elsewhere.
  • Try to agree on a price before revealing you are paying cash.
  • After you have agreed on the price, but before you have signed, is a good time to sneak in anything else you might need from them, like a ride to return a rental car.
  • Focus on reducing the sticker price, or up-selling your trade-in, or both.
  • Get the car inspected by a third party mechanic.
  • Never seem happy about the deal.

Test Drive

  • Test drive the car alone. Larger dealerships will likely want to drive the car with you, in this case try to also get a test drive alone. You can use the drive to get the car inspected to also take it for a spin alone. Small dealerships don’t have the manpower to send someone with you making this a bit easier.
  • Dealerships usually try to get you to drive the car before getting a chance to really look at it. Once you drive it you are more likely to buy it. Make sure you check out the entire car even if you have to stop somewhere during the test drive.
  • Don’t let them distract you while inspecting the car. Try to drive it alone so you have time to be thorough.

Pro Tips

  • Dealerships will likely press you for your budget early in the process. Avoid giving them a number. If they keep pressing then give a range. You could say something like "it depends on then car", or "depending on the car my budget could change", or "for this car this is as high as I will go".
  • When inspecting the vehicle, in full view of the salesperson, slowly run your hands over the seams of the car. Make a stern face, occasionally acting as if you notice something. Gives the impression you’re searching for imperfections from accidents or repairs.
  • When getting serious about price the dealer will likely show you a paper with a breakdown of the price, taxes, fees, etc. Do not look happy about what you see. The entire time they explain it stare at it like it’s all gibberish. After an awkwardly long silence say something like "I guess this isn’t the car for me", or "we’re not even is the same ballpark". This opens your chance to really move the sticker price down. You could simply point to the sticker price and ask "what can we do about that?", or "what’s the best you can do?" Even when they come back with an adjustment, don’t look happy. Repeat the process.
  • They will want to charge a doc fee. Something in the range of $400-$600. Ask them to break it down and then challenge parts that don’t seem necessary. Or be bold and simply state you wont pay it.

From my experience

  • If you have done internet research the large dealerships like to say that the "internet pricing" is their lowest price. They tell a story that a third party comes in and establishes the internet price, making it sound like its objective and already lower than they would like to go. They will probably have something, either a web site or a paper stuck to the car, showing a retail price quite a bit higher, emphasizing the internet price reduction. Don’t give in. They all reduced the price.
  • Given cars priced at about $10k, I found getting the sticker price reduced by $500 was easy with a bit of patience. Getting it reduced anywhere beyond $1,000, at least in my travels, was very difficult.
  • There is an opportunity to up-sell your trade-in instead of talking down the sticker price. My read on the situation was they still felt they won because I was agreeable to the sticker price, and as long as I convinced them they were also getting value in my car then both parties win. My situation might have been unique given how old my car was and its "classic" appeal.
  • They will offer an extended a warranty. It might sound great. May even be priced great. But your insurance might cover the same stuff, e.g. a new windshield.
  • There is amazing confidence in knowing why you are walking away. When you know the car you want and the price you will pay walking away from a bad deal feels like winning.
  • I started doing a detailed inspection of the mechanics of a car with a flashlight and the salesperson put in noticeable effort to distract me. Seriously put in effort to take the car for a test drive alone.
  • If you don’t like to rush a decision then, if possible, towards the end of the weekend, agree to a price contingent on a good third-party inspection of the car. Then agree to have the car inspected on Monday. This gives you time to think about the purchase over the weekend while resting assured no one will buy the car out from under you.
@jjorloff1
Copy link

jjorloff1 commented Aug 4, 2017

Good stuff!

@alexmacarthur
Copy link

alexmacarthur commented Aug 4, 2017

This is awesome!

@jongallion
Copy link

jongallion commented Aug 4, 2017

One thing I was told that worked for two of the cars I got, was buying a used trade-in from a dealership of a different brand. From what I was told, since they already made money from the sell the car was traded in for, and they don't like to have different makes of cars on their lot, they are more willing to make a deal on them. Seemed to work. I bought a Nissan xTerra that was traded in at a Cadillac dealership, and Jeep at a Toyota dealership both for less than they were asking and less than anything else comparable that I had seen.

@wolverinex-men
Copy link

wolverinex-men commented Aug 7, 2017

Pro Tips: Instead of running your hands over the seams (the real car guy will only be laughing at you). Yes seams can tell if a part was changed out (really off), but even new cars are not exact on the lines unless your paying $100k or more. Its better to look down the sides and touch the body running your hand over it to feel for waves. A touchup or repainting of a part on a car that can not be seen by slight color differences or orange peel is a good repair, if you see color differences or a lot paint orange peel or overspray then it wasn't a good repair.

Secret Info: When you trade a car in the car is usually $2k-8k ($8k being Porsche etc - high-end) less than what the dealer can sell it for. Also, assume they got the same deal on the car your buying on another trade in or auction they have another $2-8k. Look at the prices from your trade-in to what people are selling your car for to find out and take the car you want and do the same. KKB is good to get an idea but the black/blue/Gold/NADA book the dealer uses will always be less. The dealer is usually in a $4k win deal (read guide below), so they have room in the deal. The bad thing is the car is worth close to what the dealer is selling it for, so other buyers are looking too (competition). Most dealers will only deal on the trade-in moving the price up from wholesale but never come off the other car, if this is the case remind them they are making money on both cars. They will give sob stories of giving top dollar to the last person, don't believe it because they aren't budging on your trade why would they budge on someone else. Like its mentioned here, walk away and mention your going to XYZ dealer to talk to them.

Guide

  • These are guides, I have gotten $3k off $20k cars before and the most I have gotten has been $5k off
    $5k -- $10k cars $600 off average
    $10k+ -- $15k cars $1k off average
    $15k+ -- $20k cars $2k off average

Dealer Stories:
Let me go talk to the manager, they go and smoke out back or hang out somewhere. Watch what you say in their office they sometimes listen in to see what you discuss with your spouse.

Hey, I brought the manager in and you get introduced along with him saying your getting the best deal blah blah. Push for more and compliment the manager (if he really is the manager). Beef him up, but then work on the deal.

I had one guy never come back with the manager and act like he forgot what he was doing and then pressured for us to buy. These are just games. Too many games and I leave. If you think they are treating you unfairly or making light of the deal then don't go back.

Definition:
Orange peel - think of an oranges surface and you want it to match the other paint and to not be that noticeable, less peel is better.
Over spray - A mist look to it or dull and not shine. So the paint will be glossy and then go dull to glossy again. Can you see your image in it?

Sign up for free to join this conversation on GitHub. Already have an account? Sign in to comment