How Much Will a Dealership Come Down on the Price of a Used Car
I am a serial entrepreneur and a consumer advocate. When I’m not helping car buyers, I love working on ventures that have a positive impact.
I run a cause marketing agency and serve on the board of Vayu Global Health where we are disrupting the medical industry and preventing the needless deaths of mothers and babies during childbirth.
In the ever-evolving realm of the automotive industry, negotiating prices for used cars remains critical. Dealerships face the daunting challenge of pricing each car to optimize profitability without alienating potential buyers.
But how much will a dealership come down on the price of a used car? Well, the car's age, condition, mileage, and current demand determine what kind of rebate a car dealership will grant on a previously owned vehicle.
The dealership's primary objective is to maximize profit, which inevitably affects the negotiation of price points. That creates an unpredictable environment for buyers.
Despite this, the sales staff at a dealership knows the highly competitive nature of the used car market.
They may offer a price reduction to secure a sale. However, the precise amount of the discount is subject to volatile market forces and individual negotiation skills.
Table of Contents
- How Much Will a Dealership Come Down on the Price of a Used Car?
- Factors that Influence Used Car Prices
- Profit Margins for Dealerships
- Negotiation Techniques for Used Car Buyers
- What To Do When The Car Salesman Won't Negotiate
- How To Tell If You Have A Good Deal On A Used Car
- Alternative Options for Purchasing Used Cars
- Best Car Deals by Category
How Much Will a Dealership Come Down on the Price of a Used Car?
Depending on some factors a dealership may come down at least five percent off the asking price. But if you negotiate properly, you can get up to 15% off.
Factors that Influence Used Car Prices
There is a diverse, complicated web of factors that influence the cost of second-hand cars.
A pre-owned vehicle's age, mileage, state, make, design, and chronology all change its market worth.
These elements can fluctuate swiftly, so buyers and sellers must consider them carefully.
1. The Car’s Age
A vehicle's depreciation rate is highest in the first few years after its purchase. Newer cars generally have higher price tags.
The value of a vehicle diminishes with its age. But the degree is contingent on the brand and type.
2. Mileage
Moreover, the number of miles a vehicle has been driven significantly affects its resale cost.
A higher mileage leads to decreased value because of more significant deterioration and related maintenance requirements.
3. The state of the car
The condition of a used car also impacts its resale value.
Vehicles in excellent condition, with minimal cosmetic damage and no major mechanical issues, command a higher price.
Conversely, cars with significant damage, worn interiors, branded titles, or signs of neglect will have a lower resale value.
4. Design and brand
The brand and style of a car can impact its allure. Specific designs are more desirable than other models.
Additionally, specific brand names are highly regarded for durability. Others may incur more costly maintenance costs or have proven lower dependability.
5. History
Finally, a vehicle's history is critical to its resale value. A car with a clean record, free of accidents, and regular maintenance commands a higher price than one with a history of collisions, repairs, or incidents of neglect.
Profit Margins for Dealerships
Understanding the profits dealerships operate with is critical for potential buyers. It gives insight into why a dealership may be hesitant further to reduce the asking price for a pre-owned vehicle.
Dealerships make their money through the markup on the purchase price of a used car. The markup is typically a percentage of the car's wholesale price, or amount that the dealership paid to acquire the vehicle.
The markup covers the dealership's costs, including advertising, sales staff, facility expenses, and other overheads.
To maximize their profits, dealerships aim to sell their used cars for the highest price possible. Market demand, the car's condition, and the market’s competition all influence the selling price.
The dealership may encounter limitations in reducing the cost of a preowned vehicle to preserve its profit margin.
When the wholesale value is high, and the previous owner made additional investments into refurbishing it, the earnings from that car will be smaller compared to a car bought at a lower price with minimum restoration.
Besides, the dealership may hesitate to lower the price beyond a certain point for fear of setting a model for later negotiations.
A low price on a particular car may lead buyers to expect similar deals on other vehicles in the dealership's inventory, potentially cutting the dealership's profit margins.
Negotiation Techniques for Used Car Buyers
With a few fundamental negotiation techniques, buyers can increase their chances of securing a favorable price on their desired pre-owned vehicle.
1. Research
Start by researching the vehicle's market value before negotiations.
Analyze comparable cars in the local market and use online tools to determine the car's fair market value.
With this knowledge, buyers can better understand what price to expect and negotiate more confidently.
2. Be focused
You must also remain calm and focused during negotiations.
Emotions run high during car buying. But staying calm and collected can prevent buyers from making hasty decisions or agreeing to unfavorable terms.
3. Walk away
Dealerships are often willing to negotiate further when they sense that a buyer is serious about finding a good deal.
Walking away can create a sense of urgency and may lead to better terms in the future.
4. Learn to bargain
Buyers should be ready to bargain, not solely on the price of the automobile but also regarding other expenses linked to the purchase. In addition to the car price, consider financing, warranties, and service contracts.
Used car sellers frequently make extensive profits on these additional items. Buyers should strive to decrease or get rid of these charges.
Dealerships may be more willing to compromise on other options, such as free servicing or additional accessories, than on the car’s purchase price.
What To Do When The Car Salesman Won't Negotiate
In scenarios where the broker is not willing to move on the rate of the car, buyers will have to be creative in finding ways to save money.
One strategy, as revealed earlier, is to concentrate on aspects of the sale besides the price, such as financing or trade-in value. This can help reduce the total cost of the transaction even if the sticker price doesn’t change.
Another option is to research other dealerships or private sellers offering similar vehicles at a lower price.
By demonstrating that alternatives are available, buyers can create a sense of competition and convince the salesperson to negotiate.
Keep in mind that certain elements may prevent the car salesperson from bargaining on the price of the vehicle.
This could include the dealership's established lowest price or lack of authorization to go beyond a particular price.
Thus, when faced with such a situation, buyers should speak to a supervisor or someone higher up within the dealership to attain a better deal.
Practice the art of walking away if all else fails. This will signal a sense of urgency to the salesperson and may yield a better offer later.
Remember that the vehicle buying process is a two-way street, and buyers should not allow the salesperson to coerce them into making a purchase they are not pleased with.
How To Tell If You Have A Good Deal On A Used Car
To determine whether or not you are securing a favorable deal, compare the used car's price to its fair market.
Research the cost of similarly situated vehicles in your area and assess the car's fair market value. Buying significantly below what the market price demands offers you a great deal.
Another factor to consider when deciding if you are securing an excellent bargain is the condition of the automobile.
Suppose the motor vehicle is in good condition, boasts a modest odometer reading, and has a clean record. Even if the cost is marginally higher than the reasonable market value, you are still getting a good deal.
Also consider the extra expenditures for buying the car, such as loans, warranties, and repair plans.
If these outlays are much lower than those proposed by other dealerships or personal vendors, you have a fantastic deal for the total price of the car.
If something appears too attractive to be genuine or you sense that the cost is too extravagant, listen to your intuition. Do additional research or contemplate other alternatives.
Alternative Options for Purchasing Used Cars
Here are the alternative options for purchasing used cars.
1. Go through private sales
One alternative option is to purchase a used car through a private sale. Rather than going through the dealerships, you can buy directly from the owner.
This option often requires more effort in finding potential sellers and conducting thorough inspections. But it can often yield lower prices because you get the opportunity to negotiate directly with the seller.
2. Auctions
Another method for procuring a used automobile is to partake in auctions with physical and digital venues.
Auctions offer various vehicles at competitive prices, including coveted models and collector's items.
But you must educate yourself on the auction and cars offered to ensure you acquire a good bargain.
3. Online markets
Online markets, including Craigslist, Facebook Marketplace, and CarGurus, are increasingly popular for acquiring pre-owned vehicles.
These sources provide a broad range of cars available in your area.
Yet, you must be cautious when engaging with unknown parties online. Make sure to inspect the vehicle before locking down the deal.
4. Vehicle rental companies
Car rental companies also sell used vehicles.
These are typically dependable because they benefited from rigorous upkeep. That makes them a reliable option for those looking for a used car.
