How to Negotiate When Buying a Used Car


Know your ceilings. As stated in my article "How to buy a used car and get the right price", there are 3 numbers you need to know:

1) The most you are willing to pay for the car
2) The most you are willing to pay per month for the car
3) The most you are willing to put as a down payment

Once you know these numbers, you can move on to step 2:


You found the car you like and you've test driven it. When you sit down at the salesperson's desk, they will usually write a bunch of numbers down. Ignore them. If you've done your research, you know what the car is worth. The salesperson's numbers will always start higher than that. Then they will ask, in some form, "How much are you willing to pay?" Since you know your ceiling, you should throw out a number about 10\% below that. This is a good starting point. They will no doubt say they can't do that price and counter. If the counter is below your ceiling price, then you've done a great job. Now just work the price as low as they are willing to go and take it. If the counter is above your ceiling price, continue to negotiate until it's below. Don't let them know what your number is. If they can't meet you there, then you just say "I'm sorry. It looks like we're just too far away. Thanks for your time." Not once have I ever said that and the salesperson let me leave. Usually, this is where they say, "Let me talk to my manager and see what we can do." This is the statement that makes the salesperson say in their head "Do I want this sale or not." For a salesperson, Sales=Money, so the answer should always be "Yes".


If the salesperson met your price, the next step is the financing. If the salesperson gave you a really good deal, they still might try to make up for it by charging you a higher interest rate (higher rate = higher monthly payment). There are plenty of sites on the internet that can help you determine what is a reasonable monthly payment based on the sale price, down payment, and # of months. Use this to come up with your numbers beforehand. If you know a $15,000 loan over 5 years should cost you about $325/month, then you'll know that when they offer you $375/month that the rate is too high. If you don't know this information, then you might drive off the lot thinking you got a great deal, only to have been nailed with a high interest rate. The monthly rate is just as negotiable as the overall price (as long as you have average or better credit), so make sure your negotiation doesn't stop after the price.


Once you have the price and the financing you are comfortable with, congratulations! It's time to enjoy your new ride. Make sure before you sign the papers to mention you want it detailed and gassed up before you take it. Nothing better than a great deal, a shiny car, and a full tank of gas!

Tips and Warnings

  • Don't be afraid to walk away. Cars are expensive and there's no reason you have to buy that car today (even though the salesperson will make you feel like you need to).
  • Be polite, and show as little emotion as possible. Don't let the salesperson read that you love the car. Point out anything (no matter how small) that might be wrong with the car.
  • The longer the negotiation, the more likely you will get your price. Time is money for salespeople, the longer they work with you, the better chance they will lose out on another sale. Don't be the one that gives in.
  • This article gives some tips on how to negotiate when buying a car. The key to negotiation is having the research done and knowing your limits. You also need to know when it is time to walk away. Hope this information is helpful for you. Please also see my article "How to buy a used car and get the right price.