Cars/Motorcycles, Personal Finance

How to negotiate a used car price: 7 psychology tricks for negotiating price

How to negotiate a used car price

Outlines how to negotiate a used car price, how to prepare, the best times to buy, and the 7 psychology tricks of how to negotiate car price.

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When buying a car, whether from a dealer or privately: negotiating is worthwhile! And it’s not just about having the right arguments. We explain how the price negotiation when buying a car works and how you can save a lot of money.

CONTENTS
How to negotiate car price
How to negotiate with car dealers: Best times to buy
Expert support is worthwhile
Appear confident
Pay cash or not?
Negotiate extras
Do a thorough test drive
Learn the 7 psychology tricks of how to negotiate a used car price

How to negotiate car price

Even those who are not experienced negotiators can negotiate discounts when buying a car.

First of all: When buying a car, there is always a certain amount of room for negotiation. Of course, this is lower for cheap small cars or used ones due to the lower profit margin than, for example, for high-priced models, but the price can usually always be lowered a bit. So don’t worry about trading! 

Always set a certain price limit for the purchase, but one should not be rude and take into account that the dealer will not sell the car below its value. In order to be able to set this price limit as best as possible, preparation is helpful. What are other sellers asking for this model with similar features? Will there be a successor or a facelift soon. How are the discounts online? This is quickly researched on the Internet. And this kind of research beforehand means you can’t be unsettled or bamboozled by the seller.

How to negotiate with car dealers: Best times to buy

Salespeople at dealers have quotas for each month and the year, so you may be able to negotiate a bit more at the end of a month or the end of the financial year — they could be looking to get their numbers up on the book, and will be more open to negotiation.

Expert support is worthwhile

Always take enough time. There are enough different offers around for used cars. There is no need to hurry or buy directly from the first seller. Those who visit different car dealerships or look at more private used car ads see more choice and can obtain several offers. This creates orientation and solid arguments when negotiating with the seller. 

A friend or acquaintance who knows a lot about vehicles can also be a helpful support during the tour. Our recommendation: Make a list and write down, among other things, your conditions, the price range or payment terms. Also, what is essential for you in a car and what you can do without.

Appear confident

In addition to preparation, appearance also plays an important role. If you seem unsure, trained dealers quickly sense their chance of a good deal and often sway you onto expensive extras. Those who go about buying a car self-confidently and informed without appearing arrogant have the best chances. Another tip: Even if you have already decided on a model, never be too enthusiastic, rather keep a low profile.

Thoroughly inspect the car and speak to the seller directly about any visible or potential weak points. Especially when buying a used car, you have to take a close look at the vehicle when viewing it. Are there any scuffs, scratches or dents that were not mentioned? Does the car correspond to the specified condition? Any bump can result in a discount.

Pay cash or not?

Cash payers have particularly good cards when buying a car. If this is addressed to the buyer, high discounts can be negotiated. But financing is also lucrative for car dealerships. As a result, the dealership not only earns, but can also retain the new customer. So if you take out financing, you can also negotiate huge discounts on the car price. But preparation is also worthwhile here. Often you get the car loan at the bank on better terms.

Negotiate extras

Car buyers can also save money by negotiating services such as the first inspection or winter tires.But what can you do if the retailer doesn’t want to or can’t go down with the price? In this situation, too, one or the other extra can be negotiated. Inquire, for example, about summer or winter tires or about free inspections. The seller often still has leeway here and this can also save money. But be careful: These agreements should always be recorded in writing in the contract.

Do a thorough test drive

Once the first visual inspection has been completed, you should definitely arrange a test drive. Check all functions of the car. Should you notice any deficiencies, do not hesitate to address them. This way you can renegotiate the price of the car if necessary.

Learn the 7 psychology tricks of how to negotiate a used car price

Car dealers (and some experienced private sellers) use a number of psychological tricks. But once you know them, you are not so easy to manipulate when buying a car and can take countermeasures. Read below for the 7 psychology tricks.

1. Prepare thoroughly

As we described above, the best remedy against attempted manipulation is to know your own priorities and options. Make a list: Which conditions – price, payment terms, guarantee, characteristics of the vehicle – have which significance? What is essential, what can you do without if necessary? Then get an overview of the offers in question and compare them. From this you extract: * the best possible offer, * the next best option (option B) * and the upper price limit. Write down the answers in advance on a piece of paper. If you run out of responses in the heat of the moment, ask for a moment to think about it and take a look. This is how you indicate that you are well prepared and that you have other options up your sleeve. Of course, if your option B can’t match up, keep that to yourself.

2. Countering the first price

As a rule, you know the retailer’s asking price before you start the negotiation. With this he has thrown the “first anchor” and pulls the subsequent price negotiation in his direction. This is called the “anchor effect” — and psychologists have proven this phenomenon not only when negotiating, but in countless areas of life. According to this, we allow ourselves to be influenced in the direction of a previously mentioned number whenever we estimate a number, i.e. cannot calculate it. 

Columbia University economists tested which amount is cheapest for sellers: exactly to the dollar, rounded or just under a round sum? A high and at the same time precise supply drove the price up the most; an amount just under a round sum brought in the least. 

However, the more experienced the negotiating partner, the less these effects were. You can take countermeasures: Make the first counter offer so that the realistic goal that is acceptable to you is in the middle — even if your counter offer may seem too low to you yourself. 

3. Play with the numbers

Of course you can counter with a precise number yourself. But you shouldn’t overdo it. A seller will doubt your competence if you express too precise price expectations. Exception: You can explain in a comprehensible manner how you came up with your number! Conversely, don’t let seemingly objectively justified figures confuse you. Also, stay skeptical if he showers you with a mountain of documents or so much quick-fire information he makes you dizzy. Those who actually know the arguments on their side can afford to speak slowly and convince you with serious means.

4. Skilfully refuse

No matter how your counter offer turns out: Do not throw it into play without a reason, because that could offend the seller. Researchers from Columbia Business School in New York tested two arguments that buyers often use to justify their limit: “Unfortunately, I cannot afford more” and “It is no longer worth it”. With the first argument, the buyers fought for lower prices: the sellers viewed the reference to the personal limit as a limit to be taken seriously; they then lowered the price further. With the second answer, the sellers took offence and reacted negatively, because they felt the buyers questioned the value or quality of the goods.

5. Show disappointment

In the advertisement the vehicle appeared immaculate, but when negotiating the seller suddenly admits defects? Show that you are disappointed that he didn’t tell you earlier! Most people feel guilty when they are guilty and are more likely to act on it. 

Even an angry reaction can sometimes prompt the negotiating partner to act cooperatively at short notice, but it can also backfire on you and damage the negotiation. The anger should clearly relate to the offer, not to the person. On the other hand, if the seller expresses himself as angry, be friendly but firm: they may just be trying to intimidate you. 

6. Gaining the upper hand

In order to assess the balance of power, you have to ask yourself who has the most to lose if a deal is not reached. It is crucial to be “aware of the best other option”. The recipe? Find ten competitors beforehand and talk with them. So you don’t need to bluff, you have an ace up your sleeve. A series of experiments shows that those who have less power are more likely to give in with the price. 

But even with a weaker position you can achieve a good result, by formulating clear goals and if-then plans for the negotiation before the start of the negotiation. This includes, for example, when to get out of the negotiation. Because if you haven’t defined any fixed limits and criteria, you tend to give in to the situation in question – after all, you’ve already invested so much time and energy and finally want to have the matter done. 

Anyone who can calmly and deliberately get out of the negotiation wins the upper hand one last time; he shows that he has no need to accept the offer. The more you are convinced of it, the better it works!

7. Pay attention to the human side

During the negotiation you can rely on the principle of reciprocity. Make your concessions in stages. As a result of this so-called reciprocity norm, your counterpart will usually feel obliged to meet you too. Gradually decrease your steps as you get closer to your goal. This is how you convey that your limit has been reached. 

And last but not least, it is important to keep the irrational aspects of people in mind. A private seller could also love the car he is selling. Pay attention to whether the seller can only part with his car with a heavy heart. In this case it could pay off to admire it properly. Some people prefer to forego a few hundred euros more when they know their vehicle is in the hands of a real enthusiast.

gerhardt-richter Gerhardt Richter is a writer and a trainer at trade technical colleges, specializing in carpentry, plumbing, mechanics and construction.