Latest Industry News

July 18, 2015

10 Tips for Negotiating With a Used Car Dealer

You’ve no doubt heard that negotiating with a car salesman can be tough. Automobile salesmen have a reputation as being exceptionally savvy, well trained and motivated to close-this-sale-by-any-means-but-get-as-much-money-as-possible, etc. So you may feel a tad nervous about “facing off” with one of these professionals when you’re ready to buy a used car.

You needn’t be. Thedays of the hard sell are pretty much over. Sure, the salesperson wants you to buy a car from him – today! But he doesn’t want to force you into the purchase, leading you gradually through the sales process through a series of questions and maneuvers that have you  — suddenly, it seems to you – signing on the dotted line, the (surprised) owner of a new-to-you used car.

So as you go looking for a used car, think of the inevitable negotiation as the business transaction it is: in this era of win-win negotiations, understand that your salesperson truly wants you to be happy with the process and your purchase.

10 Tips for Negotiating With a Used Car Dealer

Here are 10 tips to help you negotiate:

  1. Know what your budget is and vow to stick to it. Regarding your budget, know what your top monthly payment can be (including the cost of insuring the car) before stepping on to the lot,
  2. Study the Kelly Blue Book and Consumer Reports to ascertain the best used cars for your budget and what Kelly says the car of your choice should cost. This gives you information regarding the car’s value and helps you keep prices in check.
  3. Unless you intend to pay for the car upfront with cash, you’re going to need financing. Check with your bank, credit union, even your credit card company to see what type of financing deal you can receive. Don’t be afraid to go to institutions other than your current bank; you may be able to get better financing someplace else. (Note that many used car dealers – even PAACO – offer financing to their buyers. Dealers may be more amenable to financing a car to someone with poor credit than other institutions would be.)
  4. Arrive at the dealership with your “walk away” price. That is, if the salesperson won’t go below this number, promise yourself you will walk away.
  5. If asked what monthly payment you’re looking to have, steer the salesperson away and talk about full price (taxes, license, fees, etc.) Don’t talk monthly payments until you’ve decided to buy the car. Let the salesperson know this upfront.
  6. Once you know the dealership’s price on the car (work hard to have the salesperson name it first, or make sure to look at the sales sticker on the car), offer about 15 percent less. Do this because most dealerships add 20 percent to their own cost of the car. Offering 15 percent below their asking price still would give them a nice profit.
  7. In fact, let the salesperson know you know about the 20 percent markup, and that you want to ensure the dealership makes a profit, but the closer the salesperson can get to the wholesale price of the car (the dealership’s cost), the better chance the salesperson has of making a deal.
  8. Take nothing personally. This includes the salesperson trying to make you feel guilty for asking that price get as close to wholesale as possible. Remember that this is a business deal. If the salesperson doesn’t like your parameters, he’ll turn you down and you can go elsewhere. If you don’t like the deal, you can walk away and go elsewhere.
  9. If he doesn’t like your cost plus 15 percent offer, offer 10 percent over wholesale.
  10. If he refuses, walk out, leaving him your phone number and tell him he can call you if he changes his mind. Meanwhile, you’re off to other dealerships that have cars in the price range you seek.

As with house hunting, never fall in love with any particular car. There’s a car at your price point and model year out there waiting for you. You will find it. It may take a while – and some strategic walking away from the dealership. But you will find it. Remember that.

In the market for a used car and need financing? Then visit the PAACO location near you.  We look forward to helping you find a good, affordable new-to-you car!

Give us a call at 877-810-4555.

Image courtesy Stuart Miles/

Back to top