Used car purchase from dealer

[malmos911]

Looking at 2 to 4 year old Toyota Highlander. never
Bought a car from a dealership before. How much wiggle
room is there for negotiations? I am thinking at least
10-15% . I guess it depends if it's a Toyota dealership or not,
how long in inventory etc. Any advice is appreciated. It would be a cash
deal and no trade.

[legion]

Used cars are way more profitable for dealerships than new cars. They can be marked up over 100% over what they paid for them.

There are three parts to most car deals: the cost of the new(er) car, the value of a trade-in, and the financing. Dealership employees are trained to figure out which part(s) of the deal are important to you and to screw you on the part you aren't paying attention to.

They may screw someone on a trade-in, say give them $4,000, and put it out on the lot for $12,000 and accept $8,000, making you feel like you got a deal. They convinced the guy who traded it in that their car was a rare version and hard to sell and to accept a low price, and convinced the guy who bought it that it was a rare version and worth a premium.

[Steve Carlton]

First thing I would say is benchmark the value of the used one by figuring out what a new one would run, especially if you wind up with a 2 year old one. Look at TRUECar, Costco, and CarGurus, as well as other sources. My thought is to make sure you save a sufficient amount to justify used vs new. If a new one isn't that much more and you get a great deal, consider you'll have the extra 2 years of life in the car and a fresh start with new tires, brakes, and service.

I'd recommend getting a CPO from a Toyota dealer. If I'm not mistaken, it doesn't cost them much to make a car a CPO and you're a lot more likely to avoid getting a rat from a non-Toyota dealer. There might be a preferred APR on a CPO, if you're financing. Either way, I'd do a PPI at a dealer.

I don't think there's a rule of thumb on wiggle room. You won't know how aggressively the car is priced. Maybe the dealer has had it in stock for 70 days and wants to blow it out and prices it accordingly. No wiggle room in a case like that. Get a feel for what they go for compared to kbb.com and you'll know a good deal when you see it or where the price needs to go if you need to negotiate. A dealer should have a link to a Carfax. It may not have all the info, but chances are good what's on there is accurate. Depending on where it was serviced, the service history could be on there, or it may have been well serviced and you can't see any of it on the Carfax.

A private party purchase should be okay. You're more likely to know the service history, get a feel for the owner, and probably get a better deal, too.

[IROC]

My father-in-law is the used car manager at a Toyota dealership (has been for for a long time) so we have lots of these conversations. The short answer is you have no way of knowing how much "wiggle room" they may or may not have. Dealers these days will put much more into a trade-ins than they used to. Sometimes they have close to retail invested in a trade. If you really want the vehicle, pay what you feel it is worth to you and drive away happy.

[aschen]

I think it is more important to figure out what the vehicle is worth than reverse engineer the dealers somewhat arbitrary pricing methodology.

I always felt comfortable splitting the difference between private party and used retail for an appliance type vehicle. IT seems dealers try to tack alot of BS fees and services on top of the advertised price as a starting point these days. Figure out what you think its worth and pay no more. The asking price could be anywhere from 98% to 150% of its market value.

[David]

I've bought 2 used Porsches from a Porsche dealership and would never buy one from a non-Porsche dealer.

With a Porsche, the dealer knows what they're worth and they know you can take a few steps and compare used price to new price of an almost identical car. So I imagine it's the same at a Toyota dealer.

At a used car dealership or even a new car dealership selling used cars of another brand, they seem to over inflate the value.

[Seahawk]

Originally Posted by IROC

If you really want the vehicle, pay what you feel it is worth to you and drive away happy.

That is the key...then never look again at prices on the car you bought, you'll drive yourself crazy.

Do your homework - Carmax alone will give you comps on a two year old Highlander, options and all.

So will Auto Trader, Cargurus, TrueCar, etc.

Don't fret the last $500 dollars if you really want the car. Plus, what is your time worth...is another weekend chasing a slightly better deal worth the effort?

That cost needs to be factored in. Good luck. I had a Highlander for a few years (2010 to 2013) and would still have it if I had bought the AWD version.

I outsmarted myself.

[Norm K]

Originally Posted by IROC

My father-in-law is the used car manager at a Toyota dealership (has been for for a long time) so we have lots of these conversations. The short answer is you have no way of knowing how much "wiggle room" they may or may not have. Dealers these days will put much more into a trade-ins than they used to. Sometimes they have close to retail invested in a trade. If you really want the vehicle, pay what you feel it is worth to you and drive away happy.

I'll bet your father in law has also told you - or can at least attest - that his dealership's happiest customers are typically those who paid the most, while the most unhappy are those that chiseled and ground and scratched and clawed for the lowest price they could get, but drove away believing there must have been another nickel to be had.

_

[jcommin]

It is impossible to shop for a used car price because there are no 2 used cars that are the same. A new car you can find invoice prices, equipment option prices and any incentives. The wiggle room on new cars can almost zero (unless it is a very desirable model). The money is made on the back end: financing, aftermarket items and any trade-in.


I look at CarMax and other sites that can give you comps. I also use EBay to see what the car was sold for - after all the market affects the price as well as condition, millage and optional equipment. As with any negotiation, do your homework, start low, know your limit and be prepared to walk away from a deal that doesn't feel right.

Good luck.

[Cajundaddy]

Go in knowing roughly what the car is worth retail based on make, model, and mileage, and make sure they are in the ballpark. If it is a great car, "the deal" becomes far less important. If it has been thrashed and beaten on, you probably don't want it at any price.

No way to know in advance what $$ they have in the car or how far you can grind them.

[Steve Carlton]

I saw a guy lease a 2018 XLE in PA last month for 14% off MSRP. Not sure if there are lease incentives in that price or if purchase incentives are higher, anyway. Just a data point...

[dad911]

I was very happy with the purchase of a used Honda Pilot..... From a Lexus dealer.

Seemed like they wanted the off brand off their lot, and service treated me great after the sale.

[T77911S]

it depends on the demand for the car too.

bought a Honda pilot recently (2013). some places had a good price and some were much higher and would not negotiate much because its a Honda.

we ended up buying a "theft recovery Honda. 2013 with 40k miles for 18k.
based on what we saw for used cars it should have been around 25k
look into it.

[recycled sixtie]

Good subject OP. I bought a CPO 2011 Lexus Rx350 in 2014 from a Lexus dealership. I am very happy with it. However I got talked into an extended warranty and have only needed one shock absorber which was covered by warranty. So I think that for instance if you buy a Toyota from a Toyota dealer or Lexus from a Lexus dealer they will sell you a decent vehicle because their reputation rides on it. You probably can get a better deal privately though and a PPI would be recommended. I had a PPI done on the Lexus even though it was a CPO.

Conversely my daughter bought a 2014 Audi Q5 from a Porsche dealer. We had a PPI done and it is a great SUV. If the dealership has a good reputation that really helps. Check the reviews. The more stars the better. ...

Let us know what you decide.

[cabmandone]

Originally Posted by malmos911

Looking at 2 to 4 year old Toyota Highlander. never
Bought a car from a dealership before. How much wiggle
room is there for negotiations? I am thinking at least
10-15% . I guess it depends if it's a Toyota dealership or not,
how long in inventory etc. Any advice is appreciated. It would be a cash
deal and no trade.

1. Do a lot of searching and do it nationally to educate yourself on the average value of
the vehicle.
2. Make your offer based on the national average. When you make the offer make sure
they know your offer is firm and be willing to walk out the door if they don't accept
the offer.
I have walked out on several deals and had the dealership call back wanting to go forward with the sale. It always puts a smile on my face to tell them "I appreciate that but I already bought a car".

The reason I suggest searching nationally is because you can get a vehicle shipped fairly reasonably. I try to educate myself on shipping cost in the event I find something several states away that looks like a good deal. I bought a low mile Rav4 in WI well below what others were asking for the same vehicle even with shipping figured in.

[MBAtarga]

If you find a vehicle on Carvana (locally to me in ATL, they show qty of 24 available), I think I've got a $500 discount code from when I bought my 3 series from them.

[Oracle]

Just last week I negotiated a used car (for my wife):
1. Find wrongs with the car, cosmetic, mechanical, etc.
2. Counter offer so they 'deduct' from the asking price
3. Offer low, they have to say no at least once, otherwise you paid too much for it

Seemed to work, got the car for $2k less (with taxes included)!

[trader220]

There is no mystery in the price of a used car these days unless its something obscure. A late model Japanese import is far from obscure. Spend 30 minutes on the internet and you can know roughly what its worth. I ran the used car department for a group that owned 4 Audi dealerships and 1 Porsche dealership and then I was the GSM at a different Porsche dealership for a couple years. I can tell you this... dealers are not making 2 to 3 times their investment on used cars with one exception. The cheapo cars they take in trade for $500 to $1500 at times can be flipped for 2 or more times their trade in price.

Think about it, if you were going to trader your 3 year old Highlander would you let it go for 50% or less of its retail value? It might take you 10 minutes on the internet to figure out its retail value. No one gives their trades away.

As mentioned there are up to three parts to every deal... Price of the car sold, price of the trade, cost of the loan / aftermarket products. Spend a little time getting an idea of what your current car is worth, what the car you're buying is worth and what a loan should cost. Many times the dealer can save you a bit in the loan cost and still make money on that loan. That's a good thing. I never understood people who paid more for a loan rather than take the dealer brokered loan just because the dealer made a little money on it.

I got out of the business because I got tired of the kinds of people who were buying $75 to 200k dollar cars and still needed to hammer away for that last 200 bucks or complained endlessly over 4 bucks on a lease payment of $1340 a month.

The stories I could tell you would make you laugh your face off.

Find the car you want. Be a reasonably knowledgeable consumer, and a reasonable consumer, make a fair deal. Simple as that. They're not making $5000 bucks on a $15k dollar car.

[onewhippedpuppy]

Originally Posted by cabmando

1. Do a lot of searching and do it nationally to educate yourself on the average value of
the vehicle.
2. Make your offer based on the national average. When you make the offer make sure
they know your offer is firm and be willing to walk out the door if they don't accept
the offer.
I have walked out on several deals and had the dealership call back wanting to go forward with the sale. It always puts a smile on my face to tell them "I appreciate that but I already bought a car".

The reason I suggest searching nationally is because you can get a vehicle shipped fairly reasonably. I try to educate myself on shipping cost in the event I find something several states away that looks like a good deal. I bought a low mile Rav4 in WI well below what others were asking for the same vehicle even with shipping figured in.

This is good advice. Arm yourself with data to determine the fair price based on similar cars, find the car you want, and negotiate a fair price. If you get the car you want for a fair price, who cares how much they are making?

[trader220]

Originally Posted by onewhippedpuppy

This is good advice. Arm yourself with data to determine the fair price based on similar cars, find the car you want, and negotiate a fair price. If you get the car you want for a fair price, who cares how much they are making?

You'd be shocked at how many people care.