The next day, you go to the dealership and the sales guy says they want $10,000 for their truck. If not, thats okay. Negotiate with dealers by phone or online. It gets worse, after 5 years the new car you purchased is worth 37% of what you paid for it at the dealership. Perhaps youve already made the smart decision to buy a used car (good thinking). Dealer Retail: The average amount this type of used vehicle is selling for at dealerships. I am assuming you can bargain haggle. In the used car market place, its how much you are willing to pay and is the car worth it. These site will give you a good idea of what vehiclesare currently going for. For example, 2007 is the year we were looking at. You risk not being taken seriously. Hopefully it will be helpful to you. This line of thinking makes the buying experience stressful and exhausting. Below is the used car offer calculator spreadsheet I made to determine what to offer for our used car. Here is thelink to the used car how much to offer calculator. However, its a negotiation where the other party is holding all the cards you are dealing with professional negotiators who do this stuff everyday. Buying a used car from a dealer is less risky than buying privately because you have more consumer rights if the car shows serious faults later. However, this is the best information that we have to work with. When you're buying a car from a private party, look up its Edmunds private-party price, using the free car appraisal tool. He wanted to be better than average because the average TMV price includes people who paid too much. Used Car Pricing: How Do You Know if the Price Is Fair? The Strategy I Used to Determine How Much to Offer In our case, the averaged values came out to roughly $11,750. Private Party: The amount you can expect to get for your car if you sell it to another individual. New cars used to be a large profit center for dealers, but have decreased 50% in the last 20 years. By average I am referring to any car priced between $10,000 to $20,000. And that is key: once you have set your bottom offer, you will want to set your top one as well. 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Find Local Dealers; Search Cars for Sale Search. You Should. We determined a fair profit for a car in that price range was to include $1,000 profit for the dealership. I bought a used car from a dealership for the first time last month. Negotiation by email or phone keeps you in control. The first step in any successful negotiation is to establish a starting point. When it comes to just how much a Car Dealer will markup a Used Car, the short answer is: Around 10 to 15 percent, or anywhere from $1,500 to $3,500 for your Average used car. And the doc fees range from 500 600 bucks. Not every dealer works the same way, especially when it comes to independent dealers that work hard to provide quality pre-owned cars that are fully serviced and inspected! I have our used car price as an example. Another factor when you set your opening offer is where you are going to go from there. This seems to be roughly what they want to make. It really talks. It might be different if you are buying a really expensive used car or less if you are buying a less expensive car. Thanks for stopping by and commenting. Youve found the car you liked, it looks clean, smells normal and drives great. Read more: Ready to get out there and buy a car? Unless you have some super mechanical knowledge or are some sort of car whisperer, take the car to get inspected before you buy it. It's such a critical step that it deserves its own article. Tell them up front that you are going to have your mechanic take a look at the car before you buy it. By Doug Demuro. However, if the document fee is over $500 a popular technique is to subtract the quoted document fee and subtract it from the bottom line price. To help you work out how much the car will cost to run, try using our Car costs calculator. That means that dealers have to make up the loss of profit on used cars. For example, if your quote shows $750 document fee, you would subtract $250 from the bottom line price ($750-$500). Then go through and pick out all the options that are on the car you like. This is a depreciating asset. Its okay, thats why they are in business. Of course, theres reading reviews and taking a test drive. After you come to a price you can both live with, get the car inspected. (adsbygoogle = window.adsbygoogle || []).push({}); The Dividend Pig is a dividend blog that focuses on dividend investing, personal finance, financial independence and early retirement (FIRE). My goal is to live off the income my dividend portfolio and rental property produce exclusively and leave the corporate rat race. Unless you have money to blow, let the person who isnt reading this post take the financial hit of a new car so you can benefit later from their costly financial mistake. Although its not a huge profit, a dealer will sell a new vehicle for a 3-5% margin any day of the week. You are in for a very rough ride. Lenders loan money based on "loan to value", which means that the amount they will finance is directly proportional to the retail value of the vehicle. I'm a dividend growth investor who is aiming to retire early in 6 years at the age of 45. A dealer might make hundreds or thousands of dollars less in profit on two similar vehicles if he got one for a bargain If there are lots of service records, awesome. Why? Get used car pricing and explore thousands of car listings at Kelley Blue Book. Dividend Payout Ratio Are Your Dividends Safe? I couldnt be more happy with the experience, the results, and the price we paid for the used car. The used car dealers are known to use a plethora of tricks. Our car affordability calculator will help you set an overall car-buying budget, while our article on how much you should spend on a car can assist you in determining an affordable monthly payment. To get the lowest price on a used car He figured $21,500 was significantly below the average, but a bit more than the dealer retail for a non-certified used Odyssey. They know you are an educated car buyer and they will have the opportunity to make up any lost profit on the next uneducated customer that walks through the door. But opting for a used car over a new one presents many positive aspects. In our own negotiations for a Certified 2007 Honda Odyssey EXL we tried offering $18,500 at the first dealership, which is close to the Trade-In price.