A friend of mine recently bought a used car, which due to unforeseen personal circumstances, had to be sold a few weeks later. His first instinct was to go back to the dealer from whom he had bought the car and was shocked to find that his car had depreciated nearly five percent in such short a time. Upon trying other dealers he soon discovered that the car had been sold to him at a much higher price than the market rate. When I heard about my friend’s misfortune, I thought it would be a good idea to write an article on bargaining for a used car and helping others avoid the same mistakes he made.
Negotiation involves convincing, understanding and compromise. It’s a way of letting the seller know the price you’re comfortable with and why. My friend felt that negotiating, a form of haggling is beneath him and appears rude and undignified. What he didn’t realize is that negotiation is a part of our daily lives and we use it when deciding which restaurant to eat at and which movie to watch and while convincing our kids that the medicine will help them feel better no matter how awful it might taste. Just because buying a used car has a direct price attached to it does not mean asking for your price is wrong.
The other thing to remember is you have to communicate the price you want. The seller does not know what price you’ve settled for in your mind and for him to even start negotiations he needs to know what you’re thinking. My friend thought the car was cheap in the first place. He asked for zero discount and got a car that was more expensive.
Confidence and authority are crucial aspects of a successful negotiation. The easiest and quickest way to attain both these qualities is through meticulous and detailed research. No one expects you to learn everything about the operations of a car overnight but you must know how to determine the fair market price of a used car. My friend did almost no research. A believer in free market forces, he felt that only dealers with fair priced cars could survive and buying from a street full of dealers, he couldn’t go wrong.
The easiest way to research price is by accessing a large automotive site, like Edmunds, and use their vehicle appraisal tool to find the worth of the car. Another way to do this would be to organize your research while making a shortlist of used cars you want to buy. Arrange the cars in rows and alongside each car, in columns, enter the make, model, year of manufacture, price, engine capacity, fuel type and mileage. Sort your list into groups of similar makes, models and year of manufacture.
While looking for used cars (either in newspapers or online classifieds) make sure you research at least fifteen to twenty cars of a particular, make, model and year so as to get a good idea on prices for that particular group of cars. This will allow you to find the average price for that model and year. I prefer this method as it gives you an upper and lower figure around the average to work with and helps you decide on a starting and ending point for your negotiation.
Now study the few cars that are much lower or higher than the average price. If the advertisement does not offer any clues you can call the seller and ask for the reason for this unusual price deviation. Mileage and usage could be one reason for price fluctuations.
You should have a starting and last price. An easy way to decide on a starting bid price for a used car is by using the lowest group price you calculated above that is not too far from the average (don’t use the car that is unusually cheap). Remember you have to be comfortable that this number is justified, as it will help you gain confidence during negotiations. For a final price use the same methodology and use the number closer to but above the average price. This will also depend on the budget you’ve decided to spend for a used car. My friend had a budget but just because he allocated money to buying a car didn’t mean he had to spend it all.
During negotiations let the seller know that you have the cash and finance is not a problem. This adds weight to your offer and the readiness of payment may help offset any possible reductions in price.
Sellers will also try to divert your attention to less important features and glamorize them. Use you research and refer to the list. If you’ve done your research well you will be able to counter the seller’s claims and explain to him how other cars with similar features are priced lower. Keep bringing the conversation back to your demand by quoting your price and how it’s justified.
Identifying small flaws with cars can also help. Chipped paint, scratches, a minor dent can all help you achieve a lower price. You can either be an expert on cars or you can request or employ the services of one. It is crucial to examine the car inside out and take it for a test drive. Minor defects and flaws can add up and tip the negotiations in your favor. If you’re taking someone along to test the car be sure that you can trust them entirely and their word counts.
Two other useful things I find hard to do, and so might you, are sweet-talking to convince a used car salesman and walking away before the seller says no. Remember that most salespeople are extroverts and often the most susceptible to compliments. I’ve seen that passing a simple positive remark about the seller’s persuasion skills and style can help in price reduction. If that doesn’t work and you feel that the seller is unnecessarily prolonging talks, walk away. Remember, salespeople get commissions on what they sell and that might inevitably lead to getting the discount you desire.
I hope these tips prove helpful in your car purchase. As for me, I’m headed over to my friend’s place with a printed copy of this article. Good luck and happy hunting!