Buying a used car is a great way to save money. You can save even more money if you know these price negotiating tips.
We have good news and bad news for buyers shopping on the used car market. The good news is the days of pandemic supply chain disruptions are behind us, which has helped bring used car inventory closer to normal levels. The bad news is, thanks to several factors like labour costs and inflation, new cars are more expensive than ever. This means some car buyers are being pushed into more affordable cars on the used market, which means there’s increased competition.
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In this environment, sharpening your negotiation skills is more important than ever. Below, you’ll find our top tips for getting the best price when you buy your next used car. By making the best use of the tools available to you, you can stay one step ahead of the competition and save yourself some money. Here’s how to negotiate the price of a used car.
First, consider who you’re dealing with
In Canada, there are three ways to buy a used car. Each one needs a unique negotiation approach, so it’s important to factor in these differences from the start.
One way to buy a used car in Canada is through a car dealership. A professional salesperson is very familiar with a used vehicle’s market value based on things like its age, trim, odometer reading, and condition. Their job is to get you to pay more than market value to cover the business’s overhead expenses and bring in a profit. However, used cars sold at dealerships are also priced with the assumption there will be a negotiation, so there is generally some wiggle room here.
Another way to buy a used car is through a private seller. Some private sellers are savvier and more aware of their car’s market value than others. This could be a good or bad thing for you, depending on whether the person does much research and swings too high or too low with their estimates. You may have more room to negotiate with a private seller in certain situations, such as if a move or new car purchase is forcing a quick sale.
Note a private seller is defined as an individual selling one vehicle they own. If you come across someone who appears to be a private seller but is selling multiple cars as if they’re running a business, you may have found a curbsider. We’ve provided some tips below on how to spot curbsiders and why you should avoid them.
The third way to buy a used car in Canada is through a third-party website such as Clutch or Canada Drives. These companies buy and sell used vehicles through a no-haggle business model. If you go this route, the tips provided here don’t apply.
Get an estimated value for the car you’re considering
One of the most important steps you can take before making an offer on a used car is knowing its estimated market value.
Consider, though, that if it’s this easy for you to get an estimate on a used car’s value, that means it’s just as easy for the seller to do it. This is why tactics such as extreme low-balling are likely to get you ignored. You can certainly negotiate, but people will quickly see through it if you don’t do so fairly.
Assess the vehicle’s condition and history
The used vehicle value you’ve just collected is great information, but it’s only a starting point. There are a few more factors to weigh that can affect how much negotiating power you’ll have when buying a used car.
By the time you’re deciding how much to offer for a used car, you should have a vehicle history report in hand. This lets you review the car’s ownership history as well as any damage that’s been reported from crashes, floods, etc.
Before making an offer, you should also have the vehicle inspected and a report completed by a mechanic you trust. Unless you know the seller and their mechanic personally and are certain they can be trusted, this is one step you should always complete yourself.
If both these reports come back clean, then you know the estimated value you collected in the previous step is a good baseline.
When deciding on an opening bid, some factors work for or against you
Next, consider whether the vehicle shows any signs of wear and tear such as dents and dings, worn upholstery, or other minor aesthetic issues. If these are things you can live with but that might make the car less appealing to another buyer, you can use them to negotiate a lower price. If a portion of the ownership history is unknown, that poses a risk to you as the buyer and can be a negotiating lever as well.
Some factors in a used car may work against your ability to negotiate. If the car is in high demand, in excellent condition, and/or from a brand with a great reputation for reliability, a seller might reject your low offer if they think another buyer will pay more. Other factors that improve a used car’s value include:
- A set of winter tires in good condition
- A valid factory or extended warranty
- Expensive work has recently been completed
- A lower than average odometer reading
- One owner
- Full maintenance records are provided and work has been completed on schedule
- A higher-trim vehicle with desirable options
- Certified Pre-owned (CPO), which comes with additional inspections and warranties from the automaker and/or dealership
The more these statements are true of the vehicle you’re considering, the closer you should expect to pay to the seller’s asking price.
Where should I start when negotiating a used car price?
Using the information you’ve assessed in the previous steps, set a minimum and maximum you’re willing to pay.
The minimum will be your starting bid. Some reasonable examples include 5 to 10% below the car’s estimated market value, or 15 to 25% lower than the seller’s asking price, based on your weighing of the factors outlined above.
The maximum might be, for example, the actual estimated market value of the vehicle, or the seller’s list price, whichever is lower. If the car is rare or in very high demand, you may choose to set this number higher. But don’t budge on this figure once you get into negotiations. This will protect you from letting your heart make decisions before your head. Keep these figures and any details about how you’ll be paying for the car to yourself until after you and the seller have agreed on a price.
If you’ll be negotiating with the seller in person and you’ll have a spouse or partner with you, be sure you’re both on the same page about these figures and how you’ll navigate through the process before it gets under way.
And if a seller tries to pull you into a bidding war with another buyer, tread carefully. For one thing, some unscrupulous sellers fabricate these situations to talk you into outbidding yourself. But even if the other buyer is real, don’t let yourself get carried away in the heat of the moment. There are plenty more cars out there, and few of them are worth overpaying for.
Additional factors to consider when negotiating at a dealership
Buying a used car at a dealership comes with many of the same recommendations as buying new.
First and foremost, don’t get sucked into talk of monthly payments, especially if you’re thinking about using the dealer’s financing. Some salespeople will try to use your desired monthly payment to nudge you into a more expensive vehicle with a longer financing term. This is especially problematic in a used vehicle, which has less time left on the road. Keep your negotiations focused on the overall price you’ll pay for the car.
Dealership salespeople have quotas to hit, no matter whether they’re selling new or used cars. If you shop toward the end of a month or quarter, or in mid to late December, you may have more negotiating power as they aim for their sales targets.
If you’re aware that a car has been sitting on the lot for a while — whether that’s because the listing length is posted in the ad or you’ve had your eye on the car for some time — know that you can negotiate for it more aggressively than you could for a newer arrival or in-demand model.
Get everything in writing
No deal is final until both parties have completed, reviewed, and signed a contract or bill of sale. And in Canada, these documents are legally binding. There’s no cooling-off period after a vehicle sale, so make sure all the details are correct — especially the agreed-on price and any special conditions — before you sign on the dotted line.
Beware of curbsiders
There are dealerships, which are businesses, and there are private sellers, who are individuals. But if you thought you were buying a car from an individual and later discover this person seems to be selling multiple cars as a business or side hustle, you’ve likely come across a curbsider.
Curbsiders are bad news. They misrepresent themselves as private sellers while making money flipping cars. These cars are often misrepresented: they may be salvage, flooded, or otherwise unregistrable, or they may have their odometers rolled back to make them seem newer than they are.
If something feels off, walk away
Buying a used car is a big and expensive decision. If at any point in the process you feel you’re being rushed or pressured, or if you feel you’re being disrespected or treated unfairly, don’t hesitate for a moment to take a step back or even walk away entirely. Your money, time, and safety are valuable, and there are lots of cars out there to choose from. Trust your gut, keep a level head, and be ready to break off negotiations if you feel something is off about the deal.
Continue to Section 11: What to know about sales taxes and fees on car purchases in Canada
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