Buying a car can be intimidating, no doubt at all. If you don’t like arguing or conflict or if you’re just keen to buy the car, there’s a lot of pressure on negotiations. The purchase price negotiation can cost you or save you thousands. How do you negotiate? We’re here with a few handy tips, tricks and processes to go through, to ensure that you buy your car for the best price you can.
Before the Offer, What Do I Do?
There’s a bunch of things that you need to do before the offer. Two of the most important factors in buying a car are; 1. How much are you willing and prepared to pay.
2. How much do you know about that car.
1. How much are you willing and prepared to pay.
This means, you need to evaluate how much money you have to put down. What is a sensible amount of money for you to spend on this particular car that will leave you with reasonable financial stability.
Never clean out all your liquidity to buy a car – it’s never worth sacrificing financial stability for a car.
If you’re paying in cash, have cash ready, if you’re paying by bank transfer then make sure your transfer limits are high enough, if you’re financing the car then make sure the finance company is ready to go.
When you go to buy the car, you want to be able to tell the seller, you’re ready, willing and open to buying it right now. This is a massive aid in negotiation, it removes other potential buyers as well as creating an urgency with the seller, they will feel like they ‘have’ to sell to you. Otherwise they are watching money walk out the door with the risk of not getting another offer.
2. How much do you know about that car.
Do. Your. Homework.
It’s just like sitting an exam, 15 minutes on Google will tell you everything you need to know. You need to do your research, buying a car is just a really expensive exam. There are websites like CarJam that tell you a bunch of stuff, that you have to pay for, with their ‘Dog and Lemon Guide Reviews‘. But the cheapest and best way is to break out the laptop and start searching the year, make and model of the car you’re interested in. If you want to negotiate you need the ammunition to do so.
You need to find out:
- How much will it cost to run for a year? Fuel economy stats, insurance costs, registration, Warrant of Fitness, tyre condition
- What are common problems with that model car and engine? If you know that the cambelt is weak in that specific engine, and it hasn’t been replaced – you can use that in the negotiations and take some money off that repair bill
- Key dates and services for that specific car. Service history? Do they have a papertrail of the servicing? When does the WoF expire? How much registration is left? – If you know these, you know how much the seller has valued the car and you have key supporting evidence in negotiations.
How to Negotiate Car Price
Ok so you’ve got all your information, you’ve got your money ready to go, you’ve test driven the car, you’re excited, you’re ready to buy. So, how do you make an offer on the car? This is where we start to negotiate.
You can put your offer out there any way that you like. It’s totally up to you as to how the conversation goes. Don’t be afraid to tell them you like the car but have some reservations. It’s not 1970 any more, you can show emotion when buying something. There are plenty of cars on the road and you don’t have to buy the one that’s in front of you.
There’s some key things that you need to convey to the seller if you’re going to make an offer and get acceptance.
- Tell them that you’re ready to pay, in full, today. Have your proof of funds ready to show them. This will immediately qualify you as a genuine buyer. It also gives you the urgency tactic, it sends the message of “I need to buy a car today, I’m prepared to buy a car today, but it doesn’t necessarily need to be yours”
- That evidence from earlier? Use it now. Be polite and tell them a couple of the things that are unique to that car
“I’m going to have to have the car serviced as it’s nearing the end of the current interval, so I’m allocating some money for that”
“With these cars being known to have weaker CV joints, I’m budgeting to get those replaced seeing as the kilometers are getting into the range where they’re known to fail”
“I noticed that it needs a Warrant of Fitness and the Registration has lapsed in the past so I’m just considering those factors when budgeting for maintenance”
Don’t lecture them, but feel free to bring up your evidence that you built your offer around when either premising the offer, making a counter, or just responding to questions about your offer. - Make them put out a number first. “I don’t want to waste your time, how low are you willing to go on your price?”
- When making your offer you should know how much those cars go for in different conditions because you did your homework. You need to remember that you can always go up, but you can never go back down. Don’t lowball them to the point they get offended, but offer a reasonable figure in the lower range. Then you can both feel out how the negotiations are going to go.
How to counter offer
If your first offer is rejected, don’t be alarmed. This happens when you negotiate and how to counteroffer is an essential skill. This happens basically every time you negotiate on buying a car. If you don’t have to counter offer then you’ve probably offered a price the seller is happy with. Sometimes it means you left money on the table, sometimes you just hit the nail on the head.
When countering, offer more information about how you’re structuring your bids, What did your research tell you? What condition is the car in relative to others on the market? By giving some surrounding detail you can better explain your offer and also talk the seller around in the process.
Important things to remember:
- You can always walk away, never feel like you have to buy a car
- People selling a car, need buyers. So if you’re made to feel uncomfortable, or negotiations break down, you can just leave.
- 1. Lower kilometer cars 2. Extensive service history 3. Lots of good options from the factory. These are all things you want to see in a car. Sellers will know this and it’s hard to throw out a lowball offer on a car that has all 3.
If you found some good tips or just enjoyed the guide, have a scroll through some of our other ‘Buying & Selling Guides’ here.