How to Get the Best Deal on a Used Car
I often get asked how I get such incredible wholesale deals from local and nationwide dealers that have amazing cars. The power of negotiation comes with the idea of having great information about the car you are buying. Here are some incredible tips to give you a competitive edge on negotiating with dealers.
- Find out how much the car you are buying actually costs for a dealer to buy.
As much as cars can vary based on options when new, in the used market the pricing isn’t that different when it comes to trading in. You must understand what range the dealer has in the car.
To do so, simply call a dealer that is not the one you are buying a car from. Look at that dealer’s inventory and send an email inquiring about needing to trade your existing car in for one of theirs which is NOT really the one you want. The idea is that the car you are “trading in” is the car you are trying to buy at the other dealership.
Describe the options, condition, etc and get a ball park price within 24 hours. That ball park is probably low, as every dealer starts low and leaves room so you feel better that they gave you more than expected.
If you get a figure of $235k on a 2013 Ferrari 458 Spyder, then assume they will probably pay 1-2% above that to earn your business. That figure is now what you call the bottom wholesale number on a car, meaning that it is very likely that the car you actually seek was bought for close to that number.
Your goal isn’t to rob a dealer blind of any profit, but to shoot for $3 – 5k above that number which gives them some profit margin and no need to wholesale. Now go to step 2 to understand why a dealer will or won’t accept your low offer.
- Timing is key.
Dealers look at the current market when buying cars, so they understand that sometimes they pay more or less for certain cars in order to minimize the risk of losing money based on what other dealers are listing for. Most dealers want to dump inventory, especially expensive ones, in 90 days or less so they can turn over inventory.
Every car that sits for a period of time means there are other deals they can’t make, because cash is tied in those sitting cars. The best negotiated cars are the ones that have been sitting for 90 or more days. Those cars are what dealers leverage to get their money out, so they can have better inventory and profits.
Find an example of the car you want that has been sitting on a lot for more than 90 days, and start talking about that one. Dealers don’t get excited in making $5k when they could make $30k. They are; however, willing to make $5k so they don’t have to wholesale the car and lose a retail sale.
- Make educated offers.
Nothing screams “dreamer” more than a guy that talks out of his ass. No dealer likes a smart ass who uses poor facts. Going into a dealership and making a low ball offer with no basis will get you taken as a non-serious buyer. You are most likely going to get the cold treatment rather than a fair negotiated price.
Look at what’s on the market and use Steps 1 and 2 to come up with your numbers. Compare apples to apples — don’t tell a dealer you can buy a 2011 Ferrari 458 with no warranty for $173k, and should be able to buy his 2014 with warranty and maintenance plan for $5k more. Ignorant deductions like that won’t lead you to the car you want at the price you want.
- Show willingness and ABILITY to buy.
When I walk into a dealership, I can pretty much test drive anything I want based on reputation and professional courtesy. Before I drive a car, I make it known that I am willing to buy that car should we reach a deal by showing proof of funds on my phone or even doing a finance application if I plan to finance.
I do so because the dealer now knows for a fact that if we reach a deal, there will be no further delay in closing the deal which gives him more incentive to negotiate with me. Dealers do deals with real buyers, not with people who are thinking they may buy. They will entertain conversations with all potential buyers, but won’t give their best prices out not knowing if you can or can’t buy.
- Always negotiate twice.
Don’t rely on one dealership — negotiate two real deals with two competing dealers. Make sure to use Steps 1 – 4 with two dealers and let the dealer know you are working on more than one deal. This gives the dealer a higher incentive to try to not let you leave the dealership without giving you the best deal.
This happens because they realize that you are now really looking and have narrowed down your choices. It is likely that if you don’t buy their car, you’ll buy the competitors instead. Don’t be afraid to leave the dealership if no great deal is offered and go after the other deal, because dealers all act differently under pressure.
One may cave while the other holds. There have been many times when I have called one dealer from another dealership to ask for one final offer. 9 times out of 10, I get a better final offer that way.
Hopefully these 5 steps can help you move the deal in your favor, and remember that even though most dealers are aggressive sales people, it’s the nature of the business. Stick to the basic strategies that I teach, and you’ll save a tremendous amount of money on the cars you want to buy.