Here’s the script for the “Negotiating A Used Car Deal” video above:
Up to this point in the transaction, we’ve been discussing new cars. Though the process isn’t any different, methods of finding valuation change when negotiating a used car deal and it’s time to figure your used car counter offer.
Not everything is cut and dry in the world of used cars as that dealer is extremely unlikely to show you what they actually paid for the car. There is no factory invoice for you to leverage in negotiations. All hope isn’t lost, though. You’ll just need to do a bit of digging on your own for an approximation on price leading into your counter.
For this lesson, we’re going to simulate the process of how to counter on a used 2018 Nissan Sentra S available near Dallas, Texas. For all used cars, you should check the Carfax vehicle history report for a couple of reasons. Carfax was founded in 1984 and is the most comprehensive source for information regarding a used car’s history. They may not know everything that has ever happened to every car, but it’s a solid resource and should be your starting point in determining if you want to buy a specific used car.
Nearly every franchised dealer will have a direct link to a Carfax report available on their site, if they don’t or you’re dealing with a smaller dealer, ask them to print it out for you.
Again, make sure the last six of the VIN match.
Don’t pay for the full report unless you’re buying from a private seller.
*Note that the rest of this section is best viewed in the video due all of the examples*
I always check this report to see if everything’s ok with the car’s history and to look for any problems that can affect value or performance. Scrolling down, I can see the owner history. My only red flag, in this case, is that there are no maintenance records like regular oil changes reported.
It’s not a huge deal, because the owner may have done it themselves, or brought it to an independent garage. Since the next sales record is with this Desoto dealership and not an auction, I can assume that the owner traded to them for a different car.
The main thing I’m looking for at this point is what did the dealer I’m at do before they put the car on the lot for sale. In this case, I know the used car department paid the service department to put on two new tires – lube, oil, and filter service – as well as a cabin air filter replacement.
That tells me they put in about maybe around three to four hundred dollars mechanically and another hundred to their detailing department to clean it up. So they’re about $500 into it besides what they paid on trade.
So what did they pay on trade? Well, consider that impossible to know for sure, but when negotiating a used car deal, we can see what the market would pay and base it on that.
Remember where we go for accurate used car values? Edmunds.com. So let’s plug in the used car information there. Be sure you have the right trim level, engine setup, color, and any options. Also, let’s make sure we have the color right and, most importantly, the mileage. For this, always click “average” condition. A dealer will sell it in clean condition, but they only paid average for it.
In the final breakdown, we can see that the dealer likely paid around $8,000 on trade, give or take a couple of hundred bucks. We already know that they put around $500 into it, so my best guess is that their total cost is somewhere between $8,500 – $9,000.
Now with the Edmunds window still open, we can go back to condition and mileage and change that to a clean condition now to get an updated valuation. Edmunds is saying here that dealer retail for this car in that market is $11,908. The dealer is listing it for $13,592. That’s $1,600 over Edmunds valuation and $4,500 over what they likely bought it for.
Now that you have this information, it’s up to you to decide how you want to handle it.
Do you negotiate to bring them down to Edmund’s valuation, or do you push it further to get closer to what they paid?
There are no hard and fast rules here when negotiating a used car deal, and whether or not they accept your offer will also be determined by if you’re letting them broker your financing, or if you’re just paying cash.
In this particular case, based on when I’m recording this, they haven’t even had the car for two weeks, so they are less likely to take a big discount. If it’s more than a month on the lot, though, you can go deeper.
Based on everything I’m seeing here, I’ll lead with an offer of $11,000 and would probably buy it from them at $11,500.