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How to get the best deal on a used car

How to get the best deal on a used car

Getting the best deal when buying a secondhand car involves much more than knowing how to negotiate the price of a used car. Most people focus solely on strategies to negotiate used car prices but in doing so they leave the door wide open for car dealers to take advantage of them.

If you want to get the best deal out there, follow our detailed strategy below which covers everything from what to do before ever meeting the seller to how you should conduct negotiations.

Even though the article focuses more on negotiating with dealerships, most tips and tricks are also valid when dealing with private sellers. Simply put, our used car buying guide will almost guarantee that you’ll know how to find the best used car deals out there.

What to do before meeting the seller

There are a few steps you need to take before ever meeting the seller. If you set aside a couple of weeks to prepare yourself, you’ll likely save thousands of dollars and get a far more reliable used car.

Do your research

Probably the most important part of the entire used car buying process is to do your research thoroughly. The more information you have, the more negotiating power you’ll have. And the less you know, the more you’ll expose yourself to being taken for a ride.

Research the model

You should know a fair bit about the models that you’re interested in before you meet the dealer or the private seller. And the good news is that it’s easier than you think, even if you’re not passionate about cars at all – just read forums and articles and see where other owners have faced difficulties. 

Some cars are famed for their clutches breaking down easily or for corrosion affecting their body sooner than it should. A simple search on Google for “model name common problems” will give you plenty of info to absorb. 

Research the dealership

Another crucial step before picking a car dealership is to dig online to see what other buyers are saying about them. In the 21st century, reviews are king. And that is because they offer you a quick and honest view into what others have already experienced by doing what you’re thinking of doing. Check a dealer’s reviews on Google, read through them all, and scan for red flags. You should also spend a couple of minutes on forums like Reddit for an even more accurate description – Reddit posts tend to be less censored than Google reviews.

Armed with information about the dealerships and the models that you’re interested in buying weak points, you now have a significantly better chance of getting a great price for a reliable second-hand car.

Create a must-have and a should-have list

You’d be surprised just how important it is to put exactly what you want down on paper. If you know what you’re looking for and what you could do without, you lower the risk of being upsold. Of course, most car features would be nice to have, but do you actually need them all?

Having a “must have” list is about acknowledging your limits and having a sort of compass that allows you to keep close to them. The more you align your final purchase with your goals, the less buyer’s remorse you’ll experience, if any.

Know your boundaries beforehand so you won’t be afraid or ashamed to say “no” when they are crossed.

Get pre-approved and set your maximum spending limit

If there is just one thing you are going to take away from our tips for buying a used car affordably, let it be this one – get preapproved for a car loan before meeting the seller. Even though a preapproval can save you a ton of money, it is still one of the most overlooked aspects of buying a car. The best part? The entire process will likely take just a couple of days to complete.

We have an entire guide on how to get pre-approved for a car loan, and we advise you to read it. But, if you’re in a hurry, here are some key takeaways:

  • Improve your credit score before applying to get pre-approved so you’ll get offered the best loan terms and APR. You can request your credit report for free and you should comb through it to spot any mistakes that can affect your credit score.
  • Shop around and don’t settle. Get at least three offers from three different lenders. Try traditional banks but don’t forget about credit unions and online lenders.
  • Apply to get pre-approved by all lenders in a 14-day window. A preapproval will trigger a hard credit pull which will slightly affect your credit score. Most algorithms do take credit shopping into account, though, so no matter how many lenders you apply to in a 14-day window, their inquiries will count as one.
  • Pay attention to the terms that you’re being offered. Many lenders have restrictions on their loans, and they can vary widely – some don’t allow you to buy a used car, for example. Read the terms in full, don’t just focus on the interest rate.

Calculate your future TCO (Total Cost of Ownership) based on estimates

Another common pitfall to avoid is thinking that your only car-related expense will be your monthly loan repayment. Far from it.

The total cost of owning a car includes:

Loan payment + insurance & annual fees + running costs + depreciation

By focusing on loan payments alone, you miss out on at least half the true cost of owning a car. If you opt for a used car, then you’ll see less depreciation but even so, it will still end up costing you thousands of dollars in the end.

You also miss including expenses such as insurance premiums, fuel, and maintenance costs, all items that are significantly influenced by the kind of car you’ll be buying. A Toyota Prius guzzles up far less fuel than a Chevrolet Tahoe and will likely be also less expensive to insure.

It’s said that you should spend 20 to 30% at most out of your monthly income on your car. As you’re looking to figure out just how much a car you can afford and still be financially stable, make sure to include every major expense. The difference in future expenses between two models far exceeds their price tag, making some cars a terrible deal in the end, even though they might not seem like it at first.

During the sales discussion

By now you should already know exactly what you’re looking for, the details and price ranges of your desired models, the best dealerships you can shop at, plus how much car you can comfortably afford. Not only that but you should also have a preapproval in your pocket, making you a cash buyer. And a well-informed one.

You are now ready to head to the dealership and choose a car. Once there, you should follow these tips for buying a used car affordably.

Control your emotions

Buying a car is a roller coaster of emotions, it can be fun and exciting one moment and scary the next. The more you can control your emotions and keep things as objectively as possible, the better your final deal will be.

The first step is to know that you’re headed for a bumpy ride, so don’t let your feelings sneak up on you and take over. It’s ok to be frustrated, it’s ok to be excited, and it’s ok to be angry. What’s not ok is to show it. Stay calm and you will build a better rapport with the seller, plus you’ll be able to read every situation and not get sucked into acting impulsively.

A real-life cheat code for added objectivity is to bring a friend or family member with you. Because they aren’t directly involved in the purchase, they’ll be able to give you a more objective perspective on things.

Focus on the out-the-door value NOT on monthly payments or the sticker price

If you’re not an experienced car buyer, you’ll likely believe that the sticker price is what you’ll end up paying for the car, minus the amount you are able to negotiate off it, of course. But that’s not the case. The sticker price doesn’t include sales tax, and it doesn’t include the myriad of possible dealership fees and add-ons.

Dealers go out of their way to make the perceived price of their cars seem as low as possible. In reality, expect to pay at least 10% in closing costs on top of the negotiated final price of the car. That’s because the sticker price almost never includes fees and add-ons such as:

  • Registration and title fees – dealers can sort the documentation out for you with the DMV but for a price.
  • Sales tax – it doesn’t apply to all states and it varies significantly, so look into the laws of your state.
  • Documentation fee – simply closing the sale on a car takes some paperwork to complete and most dealerships will charge you for it.
  • Credit or GAP insurance – not mandatory but advisable, these insurances will come in handy if misfortune strikes in the future. That being said, they up the cost of the vehicle and they’re never included in the original sticker price.
  • Extended warranty – some dealers will contest some aspects of the manufacturer’s warranty if that’s still active, and they’ll try to get you to sign a new, extended warranty. Again, it might be a good idea, but it will up the final price of the car.
  • BS fees – things such as advertising fees where the dealer makes you pay extra for having had the car listed online for sale, or preparation fees where you’re charged a bit more for the dealer cleaning the car before giving it to you. If you see anything that sounds ridiculous, it probably is, and you should ask the dealer to remove these fees immediately.

After you clean up the contract and keep just the add-ons you truly need, now you have to guard yourself against one of the ultimate weapons of a used car salesman – selling you on the monthly fee.

If you already got preapproved as we advised, then you are familiar with how used car financing works. In short, a lower monthly fee usually means that the duration of your loan is longer, which in turn accrues more interest over time, making the total amount you’ll end up paying bigger.

If you want to get the best used car deal, make sure to focus on the out-the-door price of a car and factor in your car loan as well. To save money in the long term, consider all aspects of your loan, including its duration and the total amount of interest you’ll end up paying.

Don’t let dealers sell you a model you know nothing about

This common strategy is easy to spot and guard against. If dealers see that you are well prepared and knowledgeable about a certain model, they might be tempted to switch your focus to another one that you know little about. Don’t let them sell you a car that you’re not familiar with. Either steer the conversation back to the model that you were originally interested in or don’t commit to buying anything they’ve presented to you until you’ve had time to go home and do some research on it.

Come across as knowledgeable and firm but be polite

The worst position to be in is an easy victim. The more knowledgeable and in control of yourself you seem, the more intimidating you’ll be, and the less dealers will try to take advantage of you. It sounds harsh, but it’s just one of the realities of life – even a good person is tempted to take advantage of an easy target. If you do some research into the model that you’re interested in, and if you have gone through the preapproval process for a car loan, you’ll likely possess enough information to come across as diligent. Stick to what you know and be polite, you’ll earn the respect and sympathy of the dealer, and you’ll likely get a much better deal.

Negotiate one thing at a time, don’t allow dealers to bundle things together

In dealing with car sellers, if you can keep things clear and separate, you’re probably safe. Confusion, on the other hand, is your worst enemy – dealers love to confuse their customers so that they can’t pinpoint where exactly they’re getting played.

If you buy a second-hand car from a dealer, there are multiple transactions you must pay attention to, and keep separate:

  • Out-the-door price. Negotiate the sticker price as low as you can based on your research of the market and your assessment of the dealer’s car. Cut all unnecessary add-ons and fees.
  • Trade-in value. If you have a car to trade in, make sure it will be priced correctly. The best option would be to sell it yourself; you’ll likely get more money for it. But if you can’t do that, at least make sure to negotiate the trade-in value separately. 
  • Financing. This step can and should be taken care of before you set foot in the dealership. If you got preapproved and you shopped around for your car credit beforehand, you can’t be tricked into signing a bad financing deal. 

Avoid scams with a history report + third-party inspection + drive test

When you’re buying a secondhand car, the most vital skill you can have is knowing how to inspect a used car before purchasing.

The first mandatory step in that process is to obtain a car history report. Services such as the ones provided by CarFax or carVertical will help you see into the vehicle’s past by providing information about past damages, odometer readings, title changes, and much more. Obtaining a car history report is easy, it takes just a couple of minutes and costs very little; in turn, it can offer you invaluable clues about the car’s current state.

If you read the history report through and you decide that the car is worth your attention, then you should probably take it out for a test drive, if you can. Driving a vehicle for just 20 minutes can offer you even more answers about how the car feels to drive and its current condition.

Finally, even though dealerships do inspect the cars they’re selling, it’s always a great idea to have a third party’s opinion. Take the car to an independent mechanic and use the information you gathered from the history report and the test drive to direct his attention toward the areas of the car that look suspicious.

Pro tips for buying a used car affordably 

On top of everything listed above, here are a few more tips on how to find the best used car deals out there.

Timing and location might help bring the price down

One of the perks of modern life is being able to shop online. And that certainly helps when you’re looking to find reliable used cars at great prices. As a matter of fact, this is one of the best tips for buying a used car affordably – expand your search area to other states and target regions where demand is lower.

Supply and demand are two of the main driving factors of used car prices, so if you’re looking for a convertible, maybe you’ll find a great deal on one that’s being sold in Montana. 

To increase your chances of finding the best used car deals, also add timing into the mix – convertibles sell for less during the autumn and winter months and dealers are more likely to offer you a good deal at the end of the month if they’re behind on their sales quota.

If you’re not in a hurry, wait for the right time to shop for a used car. Target slow months and try to reach out at the end of the month. You should also expand your search area to other states if it makes financial sense.

CPO Vs regular used car

If you’re an inexperienced secondhand car buyer, then certified pre-owned cars could make your purchase easier and safer. CPOs are the crème de la crème of used cars, they have gone through an inspection and reconditioning process and they come with a manufacturer-backed warranty. They are a bit more expensive than regular used cars, but the price premium might be worth it considering it keeps you safe from a few dealership add-ons, can give you access to better financing, and if you buy manufacturer-certified used cars, you’ll also get the best backing out there if things go wrong.

CPOs aren’t the magic answer, though, you still need to do proper due diligence. But they do offer a safer route to buying a secondhand car. Ask your dealer about their Certified Pre-Owned stock and see if you can find a good deal there.

Strive to have as much variety as possible, at every step of the way

The key to finding the best used car deal out there is variety. Always look for variety, so whether it’s lenders, dealerships, or insurance companies, you need to ask for offers from multiple sources. The more offers you’re aware of, the better the deal you’ll choose in the end.

Just a simple example of how variety can work in your favor – dealerships. If you work with multiple dealerships, not only will they compete for your business by lowering their prices or adding value to their offer, but you’ll also get to know the market up close.

Also, make sure that you’re looking at a variety of models so you can cast a wider net for opportunities. By searching for different models, you give yourself more options and you can also benefit from the fact that some manufacturers offer preferred financing for their own Certified Pre-Owned models.

Strategies to negotiate used car prices

There are thousands of books and thousands of courses on how to negotiate a lower price, but a few tips and tricks are all you need to know when it comes to how to negotiate used car prices:

  • Hear their opening offer first. You never know, it might be lower than you think.
  • Start with a lowball offer. But keep it civilized, fall back on your research, and begin your bidding at the lowest point you know a similar model sells for.
  • Know when to walk away. The showroom is not a friendly space for buyers, if you feel that your limits are being pushed, walk away. Even if you can’t put your finger on exactly what feels uncomfortable.
  • Always follow an offer with “because”. Giving good reasons why you think that the car is worth less than what they’re asking for is always a winning strategy. It makes it far harder for dealers to argue against lowering their prices.
  • Take your time. Never rush into agreeing on anything. It’s ok to take the contract home and read it carefully, it’s ok to ask for a day or two to think. Leave the dealership to get a more objective view.

How can you find the best used car deals? Do your research, get pre-approved, know and stick to your limits, never show your emotions, and steer clear of cheap dealership tactics that are meant to confuse and upsell you. Most importantly, avoid getting scammed by obtaining a car history report, going for a test drive, and taking the car for an independent professional inspection before you purchase it.

How to get the best deal on a used car is a matter of preparation and being flexible. You should also think of it in terms of total value received Vs total money spent. A great deal means that you can either spend less money or get more value out of the same amount spent.


How to plan a used car purchase?

Set your budget, get pre-approved, do some research to see how much the models that you’re interested in go for, and calculate the total cost of ownership. These are the main steps you have to take before ever setting foot in a car dealership.

What percentage can you negotiate on a used car?

There is no strict rule on how much you can negotiate on a used car, but you should aim for anything between 5 and 7%. Make sure you know what similar models go for, so you can appraise a car’s value correctly.

Can I use a vehicle history report to negotiate a car price?

Absolutely. A vehicle history report will give you an insight into the car’s past. Spot everything the seller forgot to tell you about the car and use that information to your advantage. 

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