If you are looking into used cars, there is a good approach and several bad approaches, even once you find a car that works for you. This guide covers five major points to consider during your negotiations over purchasing a used car.
1. Leave Your Emotions at the Door
Buying a used car is just like any other business transaction. While you may be excited to have a vehicle, anxious about the buying process, stressed over needing a car in a hurry, or even angry that things have gone poorly, you need to remember that you have money to buy an item and the dealer likes money.
Remember to treat this as just a business transaction-emotions tend to cloud negotiations when they take the wheel, so to speak. The less in control a potential buyer may be, the more likely the sales rep is to slide negotiations in their favor. Also, dealers will certainly treat this as a business transaction, regardless of friendliness. Feel free to bring a friend along for support; chances are good that their availability will better help you assess an acceptable price.
2. Don’t Focus on the Payment
Whether you are looking into new cars or used cars online in Canada, do not focus on monthly payments; focus your negotiations on the monthly payment and you will rarely get a deal. While you need to consider the monthly payments in budgeting, focus on the total price. Common sales practice is to directly ask how much you can put down each month; never answer directly and simply state that you would like to discuss the car’s price with the fees and taxes included; you want the “drive-away/out-the-door” costs, not the sticker price.
3. Get Pre-Approved for Financing Before You Start Shopping
One solid negotiation trick is removing your car loan and trade-in values from the equation. Any potential buyer of a used car should always get financing established before looking into a dealership. Simply check with your bank, credit union, or other lenders for a car loan. Once you get your pre-approval in writing, you can remove that amount from the negotiations or at least restrict the rate/length of the loan offered by the dealership. Dealerships may offer better loans but they have no reason to do so unless you plausibly threaten to shop elsewhere.
4. Avoid Pricy Add-Ons
Even once you have a final price, beware. You will now deal with financing where you will be hit with lists of add-ons like extended warranties, protection, nitrogen, and so on, often with a great deal of pressure to act. Most of these add-ons can be purchased elsewhere for cheaper and rarely require immediate investment. You want to research the products and companies they come from before purchasing. Rarely finance an add-on because it elevates the loan-to-value ratio on your auto loan and can hurt equity.
5. Be Prepared to Walk Away
This is the most basic but easily forgotten piece of advice in any sort of negotiation, let alone when looking to buy a used car. No one has a gun to your head telling you to buy that specific used car that you seem to resonate with. It is a known bit of human psychology that the more you verbalize a certain course of action, the more that decision seems like good idea-used car salesmen recognize this quality and will use it to steer you into purchasing something when part of your brain is going “this car is missing some features that I wanted” or “this seems like it will cost a lot more than I was willing to put up.” The biggest rule of negotiation is to not treat the transaction like an inevitability and instead acknowledge that you can, and should, walk away if the deal seems too pricy or protracted.
Sealing the Deal
So those were five useful tips when looking to buy a used car. Be willing to walk away from a bad deal, ignore the pressure to buy add-ons, get pre-approved for a loan before you shop around, do not focus on your monthly payments, and treat the whole process like a business transaction and you can avoid several consumer pitfalls of the used auto market.