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The Best Way To Negotiate A Used Car Price


Buying a used car is an excellent way to save money. Cars are depreciating assets and the older they get the less they are worth. However, value and the miles a car has left in it aren’t always correlated. You can buy a car with well over 150,000 miles on it and have it last another 50,000 or even 100,000 miles if it has been well maintained over its life. 

The initial few years of depreciation are the steepest meaning the car loses the most value the fastest in this life stage so buying a car after it has reached this is the best way to get the most bang for your buck. 

When it comes to negotiating on the purchase of a used car, the seller traditionally has the advantage. They have more information about the vehicle, and if you are dealing with a dealership, they have a lot more experience buying and selling cars and nothing but time on their hands. 

Regardless of who you purchase from, the best way to negotiate price on a used car is to be knowledgeable on the vehicle and how much it is actually worth using sources like Kelley Blue Book or Edmunds. In addition you should make a reasonable first offer for the vehicle that is around 20% below that fair value. Negotiating up in small increments from your first offer is the best way to secure a good deal on a used vehicle.  

If you don’t like negotiating you should consider discussing purchase terms online via email or texting with the owner of the vehicle whether they be a dealership or third party seller. Play to your strengths in the process of negotiation 

How To Get The Best Price On A Used Car

  1. Know what the car you’re interested in is worth
  2. Ensure you can afford the vehicle
  3. Get pre approved for financing if that is how you intend on paying for the car
  4. Make a smart opening offer
  5. Make a counter offer that is still under what you are willing to pay
  6. Take the right offer when it is presented

Know Your Negotiation Style And Shop Accordingly

Before we get into the details of this list, you need to know your options when it comes to buying a vehicle and what that will mean for your negotiations. Negotiating with a third party seller tends to be a more simple process with a level playing field, but it is not without its downsides. 

Pros Of Private Party Vehicle Sales:

  • Less expensive purchase option
  • Experience wise you are more evenly matched with the person selling the car
  • Quick and efficient sales process (usually)
  • No dealership fees
  • No dealing with salespeople

Cons of Private Party Vehicle Sales:

  • You can’t look at reviews of other user’s past experiences
  • The car has no warranty
  • No financing options from the seller
  • No lemon law protection
  • You’ll buy the car as is (and it likely will not be detailed)
  • Potential for fraudulent activity and scammers
  • You have to take charge and ask for what you need in terms of documentation
  • You can’t be afraid to negotiate
  • More modest buying experience 

Now that you know what you’re getting yourself into, let’s get into the dos and don’ts of negotiating on a used car

Know The Specs On The Vehicle

The single most important thing you need to do when negotiating the price of a used car is to know how much it is worth! Look up the market value online using Kelley Blue Book, Edmunds or another pricing guide. Be sure to enter in the exact information for the car like the mileage and color. If you know the trim package interior colors and fabric types as well as the entertainment system in the car be sure to add that info as well to get as accurate an estimate as possible. 

You cannot hope to negotiate properly if you don’t know the fair value of a vehicle. Use one of these well trusted 3rd party sources to determine an unbiased value of the vehicle

Know How Much Car You Can Afford

Don’t overspend on a vehicle that you can’t afford. Before we get into financing a vehicle or paying in cash for one, you should know the rules for spending on a vehicle. 

Get Your Financing Straightened Out Ahead Of Time

I am a huge advocate for paying cash for a vehicle, unfortunately, this isn’t always something that’s doable. If you can afford to do so, pay cash for the car you want to buy. You will save yourself a ton of money in interest by choosing not to use a loan.

 Loans enable people to buy more car than they can afford and get themselves into debt. It isn’t a smart practice. However, if you do need to take out a loan to buy a car, you should get pre approved BEFORE you begin to negotiate. You should also be honest about how much car payment you can afford. Here are some general rules on deciding what is a smart amount to spend monthly on a car payment. 

Financial Rules For Buying A Car

Different people want to spend their money in different ways. Find the spending habits you align with, but be sure that it does fit in your budget. The last thing anyone needs is to spend more money than they should on a vehicle only to realize they can’t afford it. 

  • The Frugal Individual: Don’t spend more than 10% of your annual income buying a car
  • The Realist: Don’t spend more than 20% of your annual income buying a car 
  • The Splurger: Don’t spend more than 35% of your annual income buying a car. 

Call up the financier and ask what criteria you must meet to be approved and then ensure you check all of those boxes. If you do, ask the company to pre approve you for the loan. Do not go into a dealership blindly and expect to have a happy outcome. The salesperson might ask you what you can afford monthly and answering this question is setting yourself up to be taken advantage of. If you are hearing a monthly number, it will disillusion you into thinking the overall cost of the car is lower than what it is. Go into it knowing what your loan structure will look like with the car you are interested in. 

The bottom line: know what vehicle you want, ask what the actual price is after all the fees and taxes etc, THEN make sure it is a car you can afford and look into the terms of the financing before you even think about signing your name on the line for the car. There are no take backs so make a smart financial decision that works for your budget. 

If You’re Paying Cash, Be Prepared

If you are paying in cash, make sure your bank will authorize the large transaction you are attempting to make. Be prepared and call your bank to discuss how you can successfully buy the car. Some banks won’t let you withdraw above a certain amount in a day so don’t just assume you will be able to spend your money. 

A cashier’s check is a good way to go, but you’ll run into spending limits for these too if you don’t call your bank and pre approve the transaction. 

Plan ahead and make arrangements at least a few days in advance. 

Making A Smart Opening Offer

If you have your finance options set up, it is time to jump into the negotiation part of the car buying process. This is assuming you test drove the car and had it looked over by a mechanic you trust. Negotiating for anything tends to be a buyers game. The seller may have more info, but the buyer can always walk away from a vehicle if they don’t like the price. So here is lesson #1 DON’T BE AFRAID TO WALK. There are tons of cars available to purchase and if you aren’t desperate to purchase YOU THE BUYER have the power. 

The first offer that you make on the car should come after you know what the fair value of the car is (which is ideally what you’d be able to turn around and sell it for). I always encourage those negotiating to offer 80% of the car’s value as the first offer. So if the car is worth $10,000, your first offer should be for $8,000. What this does is shows the owner of the vehicle you are serious enough to put in an offer, but you’ve opened up for them to negotiate upwards towards the actual value of the car. 

Go too low and you’ll tick people off and even insult some car owners if it is a 3rd party seller. Sometimes a car owner will accept your first offer, this won’t typically be the case when negotiating with a dealership, but with a 3rd party seller there is a possibility. After you’ve made the offer, wait. Don’t say or do anything, but wait for the salesperson or owner to respond paying careful attention to their body language. 

Ideally, you won’t make the first offer at all. If it is a 3rd party seller, you likely know what they are asking for the vehicle. Ask them what the best price they will accept on the vehicle is and feel them out from there. Some owners will price their car high leaving room to negotiate. Others will put a firm price on the car and if it is comparable to the fair value on the car, you may not want to negotiate at all. 

The bottom line: always go back to the fair value you found when you looked up the vehicle. If you are able to get a price that is at least 10% below this, it is generally considered a good deal. 

Counter Offers

If the person you are negotiating with makes a reasonable counter offer that is close to the fair value of the car, then you are officially in the negotiating game. If the counter offer is incredibly high, personally, I would walk away. If they have any interest in selling the vehicle then they have your contact information. This will tell the owner that you aren’t going to roll over and be taken advantage of. Don’t act upset or mad, just be clear that you think this offer is unreasonable. 

If the offer is fair, then consider offering an amount somewhere between your first offer and their counter offer. 

One thing to look out for are salespeople that are looking to wear you down by wasting your time by taking each offer to their manager and dragging out the negotiation process. They are hoping you will just give up and accept an offer eventually. Be clear that you have a limited time frame to make the sale happen and if you do feel you are being played with in negotiations, give them your contact information and leave. 

If they are serious about selling the car they will do everything they can to hold you at that point or they may call you in the 3 day period after you walk out of their office with the deal you want. 

If you reach a number that is below the fair value of the vehicle, preferably about 10% below, take the offer! Getting to yes is important. 

Taking A Smart Deal

If you get the offer you want, you need to be prepared to take it. When the proper price is offered up, snag it! Again, anything close to 10% below the fair value is a good deal and something you should consider. Obviously vet the car and ensure you aren’t getting a car that is broken in some way. It is encouraged to have the vehicle looked over by a mechanic that you trust after you’ve test driven the car. 

If you’re shopping at a car dealership, they’ll do their best to sell you on extras like a maintenance plan or a warranty. Don’t let that muddle the price you’ve agreed on. Write down the numbers that they’re telling you and review the breakdown of these numbers. Evaluate dealership fees, taxes and title costs and anything else in the mix. 

What You Should Be Paying:

  • The price of the vehicle
  • Sales tax with several exceptions
  • Tag and title fees

Signing The Paperwork

The last step of the negotiations is signing your name on the line and getting the keys, but if only it were that simple. Well, it usually is when you buy from a private party seller. Pay them, sign the title and bill of sale and be on your way. This is the preferred method of buying in my opinion for this simplicity alone and not having to deal with used car salespeople. 

Be sure to have your payment ready to go. You can still get financing for a private party, you just have to get it beforehand. Look into your options for this through your bank or a local credit union. 

If you have chosen to purchase from a dealership, you need to get all of the verbal offers in writing and review them. If you are using financing, make sure you can afford your monthly payment. Don’t be afraid to walk away even at this late hour of negotiations if you are getting cold feet.

 Know that any additional add ons offered from the dealership like warranties to paint protection programs are a waste of time at this point. You’re better off getting these things at a later date from the dealership as they usually come cheaper, or from a third party which tend to have better protection. 

Best Practices For Negotiating

  • Know that nothing is personal, you don’t know the other person and they don’t know you. You’re both just trying to get a fair deal. Stick with the numbers and keep conversations related to the vehicle. 
  • We don’t negotiate with terrorists! Jokes aside, never do business with someone who tries to pressure you or intimidate you into a sale. 
  • Don’t be afraid to walk away from a vehicle. For whatever reason! If the person selling the car gives you bad vibes, you don’t like the price, the car doesn’t drive well etc. 

If You’re Buying Used, Make Sure You Can Pay For Your Repairs

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Car repairs can be absurdly expensive, and if you are buying a used car, you can expect those unexpected repairs before too long. 

Depending on your vehicle it could cost you thousands of dollars to make repairs to components like the transmission. 

If you have to replace the engine block it could cost you more than $10,000. 

If that seems absurd to you, luckily you aren’t alone.

A vehicle service contract from Protect My Car can help cover the cost of these excessive repairs. In fact, you could pay as little as $100 dollars for that $9,126 transmission repair.

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  • Steering
  • Suspension
  • Engine
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About Protect My Car

Protect My Car is a vehicle service contract provider, also referred to as extended car warranty provider, with multiple coverage plans for new and used vehicles with low to higher mileage to help meet your needs and budget. Protect My Car customers work directly with the company for customer service, claims administration and contract financing. No middleman or the need for third-party approval. All Protect My Car Plans include best-in-class claims and customer support, 24/7 roadside assistance, free oil changes and tire rotations and the exclusive PMC Rewards Plan, providing daily deals, giveaways, coupons, and thousands of ways to save money every day. Protect My Car has a 30-day money-back guarantee.

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Disclaimer: By submitting this form I am giving Protect My Car consent to contact me with info and offers by email and/or telephone which may include artificial or pre-recorded/pre-selected calls and/or text messages, delivered via automated technology at the telephone number(s) provided above even if I am on a corporate, state or national Do Not Call Registry. I understand that consent to such contact is not a condition of purchase. For SMS messaging text stop to stop. Msg and data rates may apply. Max 10 messages per month. The Protect My Car privacy policy governs our data collection policy. Protect My Car does not offer or sell Vehicle Service Contracts in AK, CA, HI, MO, OK, or WA.

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