How to Negotiate Used Car Price

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Jul 14, 2021

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What You Should Know

  • Pre-approved or pre-qualified financing will give you more information on how much you should spend on a used car
  • Pre owned vehicles purchases may not always include insurance policies
  • Auto insurance is a legal requirement across the U.S. and a car dealer will not let you leave with your vehicle purchase without proof you hold an active policy

Although there are many benefits of buying a used car, the mere thought of negotiating a used car’s price fills many people with enough dread that they’d prefer to put off the entire purchasing experience. Most used car buyers focus solely on the act of haggling with a dealer and fear paying top dollar for a “lemon” they’ll hate before they arrive back home.

It doesn’t have to be that way.

In reality, the majority of the negotiation work occurs before you ever speak with a car dealer. You’ll need to determine your budget, your needs, and the expected value of the used or pre owned car. Then, you’ll need to test drive the vehicle.

Once you have all this preparatory work completed, you can easily walk into a car dealership or meet with a private seller to negotiate prices with complete confidence and begin the car buying process.

Begin with Your Budgeting

Before you start browsing makes and models, you’ll need to establish an accurate understanding of your finances and what final prices fall within a feasible range. Unfortunately, determining what target price you can meet takes more effort for most people than a glance at your bank account and some mental math.

What are Your Current Car’s Ongoing Expenses?

A vehicle’s sticker price does not necessarily reflect its ongoing maintenance costs or market value. Many owners view their car as more of a utility solely for “A to B travel.” It’s easy to forget ongoing maintenance costs if you don’t think about your vehicle beyond the basic transportation it provides. Evaluating your current ongoing expenses can help you determine how much per month you’ll be spending on top of potential car loan and insurance payments.

Consider the following questions to figure out a baseline for your current vehicle’s costs:

  • How many miles do I drive per week/month?
  • What is my gas mileage? Am I comfortable continuing to spend that amount?
  • How often does my vehicle require essential maintenance (e.g., oil changes, brake pad replacement) or more substantial fixes? What do those usually cost?
  • How much is my car payment per month (if you have one)?
  • How much do I spend each month on auto insurance?

Determining how much you currently spend on your vehicle will give you a baseline for ongoing maintenance and service.

Breakdown Your Monthly Budget

Once you’ve estimated your monthly vehicle expenditures, compare it to the rest of your budget to see if you have more room to put towards your purchase. If you intend to pay for an old car entirely out of pocket, the amount you can spend will be determined chiefly by your monthly budget, savings, and any trade-in value your current vehicle holds.

Trade-in Value

Do you intend to keep an existing vehicle, or will one set of wheels suffice for your needs? If there’s no reason to own two cars, research your current ride’s trade-in value. Sites such as Kelly Blue Book make it easy to look up the current market value for your vehicle according to its year, make model, color, trim options, and general condition. However, note that most dealers will offer less than the market value you find online.1

If you’d like to find out what a dealer or car salesman might offer for your trade-in, larger retailers, such as CarMax, may make you an offer that stays good for one week. Then, if you find the value is sufficient, you can go ahead and trade your vehicle in right there or use that number as a baseline while you continue making calculations.

Consider Pre-Approved or Pre-Qualified Financing

Although you may not return to this step until narrowing down your vehicle search and collecting price information on a few makes and models, pre-approval or pre-qualification for an auto loan will give you even more information regarding how much you can spend on a used car. Remember to recalculate your expected purchase expense to account for the monthly payment you’ll make on that additional financing.

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Determine Your Use Case

Objectively, the best vehicle for any car buyer sits at the intersection of an affordable (ongoing) price and their use case:

  • If you primarily use your car for your work commute and errands, consider vehicles with good gas mileage (or decent range if it’s electric) and low maintenance costs.
  • If you’re a homeowner who needs to make runs to the hardware store and or gather supplies for other household projects, consider a small to mid-sized truck or SUV.
  • If you intend to shuttle around your kids and their friends for sports and other activities, something with larger capacity and good safety ratings makes more sense.

That said, if you love the experience of driving a vehicle (or a specific type of vehicle) and it fits nicely within your budget, look at makes and models that bring you joy every time you sit behind the wheel. If you prefer to do as much of your own maintenance and service as you can, consider parts cost and mechanical accessibility to save yourself wallet-worries, headaches, and busted knuckles.

Determine Your Purchase’s Expected Value

Once you’ve settled on your budget and use case, start looking around online for vehicles that match to compile a shortlist. From there, you can evaluate models within a few years of each other to find the right mix of features and savings. If a vehicle’s platform hasn’t changed much in a decade, you can find even more value by considering a model that’s a year or two older.

With your list in hand, begin looking for dealers nearby who have the vehicles in stock. Aside from any discrepancy in the expected wear and tear accrued by previous owners, there should be no difference in a 2015 Toyota Camry with the same trim level and features sold by different dealers. If one location offers a better price or a promotional offer, mark them down as your first choice to consider.

Don’t Forget Private Sellers

While private sellers may list vehicles for higher prices on average, neglecting to look only does yourself a disservice.3 Many sellers believe they can receive more value than a trade-in by listing their car on sites such as Craigslist or Facebook Marketplace. Similarly, if you don’t like the trade-in offers you receive for the vehicle you intend to replace and are in no rush to off-load it, create a listing yourself and see if anyone makes a fair offer.

Test Drives (The Fun Part)

With all of your information acquired, it’s time to have some fun and test drive the makes and models you’ve added to your list. You can’t determine how much you’ll like or hate a car from behind a screen, so find out the local dealers who have the vehicles you’re considering in stock and request a test drive. While behind the wheel, try to evaluate as much of the car as you can.

During the test drive, be sure to list down what to check when buying a used car and answer questions like “do you like the acceleration and braking response” or “is the dashboard configuration distracting?” If a car you thought was perfect during your initial investigations will leave you grumbling repeatedly about certain aspects or features throughout your ownership, it’s not worth the investment.

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Negotiating—The Final Step

By now, you’ve completed most of the legwork and it’s time to fetch a good price. Onto the final step, how to negotiate  pre owned car prices.

Adding up the room in your budget, acquiring prices, and finding alternative sellers will help you have a baseline range for what you can afford, what the vehicle should cost, and when it makes the most sense to walk away.

If you’re still worried that a salesperson may try to take advantage of you, bring the information along to show them you’ve done your research. While visually inspecting the car, take your time to look it over in its entirety. The reason for doing so is to find any apparent defects or damage. If you come across any, be sure to point them out to the seller during negotiations to see where you can lower the price or deal.

Even if you have no idea what you’re looking at, a thorough visual inspection can cause the seller to think you do and negate any attempts they might make to drive the price up ahead of time. If you’re looking for something to say or trying to stall, consider that car value depreciation estimates average to $0.59 per mile.2 Check the odometer and take a few minutes to do some math on a notepad.

Extra Costs and Fees

When you purchase from a dealer, they may try to add in additional costs and fees. Sometimes these additions are reasonable, but if you think others are questionable, ask for a list you can take home to do more research.

For example, if a dealer offers you an extended warranty on a used car, ask if the manufacturer’s warranty remains active. Some manufacturers’ warranties remain in place for one to three years.

Never forget that you don’t have to make a purchase and can always walk away. That is the biggest advantage anyone looking to purchase a vehicle has. The exact make and model will likely be available at another location, and feeling comfortable with your purchase is paramount.

Don’t Forget Car Insurance

Although you should’ve already factored the cost of your car insurance policy into your budgeting efforts while preparing for how to negotiate a used car’s price, remember:

  1. Auto insurance is effectively a legal requirement across the entire U.S., and a car dealer will not let you leave with your vehicle purchase without proof you hold an active policy
  2. While some new cars and leases might include insurance policies or specifications within their terms and conditions, pre owned vehicle purchases may not—depending on whether you’ve sourced additional financing.
  3. You may wish to consider adding additional coverage, such as gap insurance, to protect your new investment better.

Before you go to a dealer to start negotiating, make sure you have your car insurance squared away. If you intend to keep your existing coverage, many providers offer a grace period where the new (to you) vehicle stays protected under your old policy. However, the better option remains to contact your provider to update your vehicle information and adjust your coverage as needed. You may even receive a discount due to your new vehicle’s extra safety features.

Furthermore, if you’re wondering “do I need gap insurance on a used car,” or “ should I buy an extended warranty on used car,” depending on the value, you might have to consider having both. So be sure to check beforehand. 

Comparison-Shop Policies with Ease—4AutoInsurance 

If you’d like to look around and see if switching to another insurance provider will lead to more savings and a better deal, you’re already in the right place. We’ll help you comparison-shop among insurance policy quotes based on your Zip Code and some basic information about your vehicle and driving history. 

In just a few minutes, you can browse offers for all the makes and models you’ve added to your potential purchase list.


  1. LA Times. If you must trade in your car, here’s how to get the most for it. Italicized title of article.
  2. Washington Post. Your car might be costing you a lot more to drive than you think, AAA says.

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