The best way to get a good deal on a used car is to go armed with as much information about negotiating a deal, knowing what type of vehicle you want and having a limit on the price you want to pay. Know how to haggle.
There are a lot of pitfalls when buying a used car. Car salesmen know all the pitches to get you into a vehicle and drive off the lot at a price they want you to pay. They are a special breed. Good salesmen are very slick so you need to know what it is you want.
I found this article which will be a great help if you are about to venture out into the car dealership world.The author of this article took the time to do some practical research with a friend who was buying a car. Here is what he learned.
Knowledge Is Power
In the negotiation game, knowledge is truly power. And in the car buying business, the car salesman usually has the most information. Think about it. When the average buyer walks into the dealer, he’ll immediately divulge to the salesman which car he wants, how much he can pay per month, and which vehicle he’s trading in.
Meanwhile, the salesman gives away no information that would help the buyer. Information like how much the car really cost the dealership, how low they’ll really sell it for, or what’s the real value on the buyer’s trade-in.
Who do you think’s going to get the better deal in this scenario? The dealer, of course. He’s the one with all the information!
Thus, to minimize the amount you pay for a car, you need to do two things: 1) hold your cards close by not telling the dealer exactly what you’re looking for or how much you’re willing to pay and 2) find out as much information about the car you want to buy before you walk into the dealership.
Know How Dealers Make Their Money
When you’re talking with a dealer, it’s important to know that dealers make money three different ways with each customer.
They can make money on the front end of the purchase by selling the car for more than what they paid to buy it.
They can make money on the back-end, selling you things like financing, extended warranties, and dealer add-ons like rustproofing.
If the dealer includes trade-in value, they can make money on the difference between what they pay for your car and what they get when they sell it.
Most buyers just focus on #1. However, car dealers might actually make more money on numbers #2 and #3. Thus, when you start negotiating for a used car, take into account things like financing and the trade-in value of your current car when calculating the final price.
How to Negotiate for a Used Car
Buy cars that are at least two years old. Why two years old? Well, they’re new enough that they still look nice and probably don’t have a lot of problems. But more importantly, a new car’s wholesale value drops between 45 and 55 percent of its original sticker price after two years. What a bargain!
Read Consumer Reports annual auto issue. Consumer Reports annual auto issue comes out every April and has a used car section that gives you info like lists of most reliable and least reliable used cars and frequency-of-repair records for recent model years. This information can help you create a list of used cars you want to check out.
Get the big picture value. Once you have a list of possible used cars, get an idea of how much they generally go for by checking the Kelley Blue Book’s Guide to Used Cars and the National Automobile Dealer’s Official Used Car Guide. Don’t just rely on the website versions of these value guides. The websites won’t give you a car’s wholesale price, just the retail value. The wholesale price is what dealers use to determine how much they should pay for a car. After paying the wholesale price, dealers jack the price up for retail. You want to buy the used car for as close to the wholesale price as possible.