So you like the car, it drives well, you’ve inspected it closely and/or had a good mechanic inspect the car. Time to close the deal. Bring cash.
Here’s where your anxiety will probably go up, you’re going to have to talk about stuff you don’t want to talk about, and that the buyer is not going to really want to talk about. Negotiating is another perfect test case for using emotion to guide your decisions–remember: don’t panic; keep calm. Calm is an emotion (er, well, sure).
Some basics that I like to use: Negotiate on a case-by-case basis. If the car is priced fairly, is in good condition, needs no repairs, and is already cheaper than comparable options, there is nothing wrong with giving the full asking price. This is called satisfying your interests, not your position. If the deal gets you everything you’re interested in having, then you’re done. There is no need to force a negotiation if the deal is fair. Hand over the cash and call it a day. There is no need to feel like you need to go into battle. All you want is to get the fairest price you can.
Also remember: there are a lot of cars out there. If you don’t like the seller, and don’t want to deal with them, just walk away. Nothing is done until the cash moves over. If you found your way to the car, you can find your way away from the car. You didn’t commit to anything, you didn’t promise anything.
There are times when you can negotiate, and times when you can’t. When I sold my 4runner, I had massive interest in it, and people were jumping up and down to buy it. Because of this, I did not negotiate. I stuck to my price and sold it for cash. When I bought my Volvo, the price was completely fair and the car was in great shape. I paid his asking price for the car and called it a day. When I bought the 4runner, I felt there were other trucks that were a bit cheaper, so I told the guy I was a starving student and asked him for 10% off the asking price–and he was cool with it. When I bought my Accord from the dealer, I told them that I would need to see the inventory price of the car, and I would give $200 above that price–and they took this deal. This was about $3000 below the MSRP, which is never the actual price of the car; I’m sure they still made some money on the car. In no case did these negotiations reach a fever pitch, it was just two people making a deal in which both parties were equally uncomfortable, so to speak.
When to negotiate? There are many cases when you will want to negotiate a lower price of the car. If the car needs repair that was not included in the initial price, if the car is priced higher than comparable cars, or if you have a budgetary limit that you need to stick to and the car is outside of your range. Typically, the seller will price the car a little above what their bottom dollar is, so it is normal to expect to negotiate. Use your gut here, if the car doesn’t seem worth it, you can walk away. There are a lot of cars out there. If the seller is pressuring you into a car that is common and easy to find, you hold the cards and you can just walk away as you like. If it’s a rare car, you will need to expect that you will not be able to negotiate as much.
So to manage your emotions, start with a basic idea: know your last move before your first move. What’s the maximum you want to spend on the car? If it is significantly below the asking price, walk the seller through your reasons for needing the car at a cheaper price. When you are calculating how much to deduct base on needed repairs, inflate all your cost estimates by 15% and deduct that from the asking price, i.e. tires should be a pretty much automatic $500 off the price. You’re going to dance a little bit. Start by asking a fair price under your Last Move price. They will probably come down a bit, then you can try your Last Move price and see if they can match it. If they don’t budge, no big deal. You can think one last time about whether you can meet your Last Move price with another seller and car.*
*How to know what’s a good deal? If you followed my last post, you have been looking at Craigslist for a few weeks, so you know what is a fair price. All else being equal, you can assume that the cars you saw in that week will be predictive of the cars you will see next week. If the car you’re looking at is in the middle third of prices for the same car, you can bet on seeing a comparably priced or cheaper one next week. If it is in the lower third, you have a lower chance of seeing a comparably priced car, so you should be more likely to bend to a higher asking price. Your goal, so to speak, is to buy a car for a price that is at the top of the bottom third of pricing. This assumes little variance in the condition of the car–which is a bit of a false assumption, but it gives some guidelines.
So in the end, they may reach a bottom dollar that is higher than your last move. If it is outside the bottom third of prices for similar cars, you can safely move on and count on finding another car in your price range. I would say at this point, take a break, call a friend, and see how it feels if you imagine buying it at that price, or how it feels to wait for another car.
This is all to say that once you have a strategy in mind, you can just ask for concessions and go from there. If they get upset or pushy or whatever, that’s fine, let them be.
I usually start the negotiations by saying, “So let’s talk about the price a little bit.” Then I pause, if they jump in with something, then I go from there, but if they let me continue, I begin to list what I think of the price and the car and the reasons why the car needs to be cheaper. If you’re looking at a car that is outside your budget, and you just need to get a discount so you can afford it, that is also fine, and it will help a lot if you have the cash with you and you want to make a deal right there. A lot of the time this will work. If you ask for an inappropriate deal, it can be insulting, so try to avoid that. If you don’t like the person very much and you think they don’t seem trustworthy, don’t buy the car. Stick to your gut–use your emotions correctly.
You can also talk about the price over the phone when you first contact the seller, just to see if they are ready to bargain.
When you have a price agreed on, you’re not done! Don’t get into the mood of feeling relief and wanting to get on with it. Stay sharp. Ask to see the pinkslip and verify it, once it’s good to go (and you ran a carfax), then you can start counting cash and filling out the pinkslip. Just follow the directions on the pinkslip, which will vary by state. Get a receipt saying that the seller has received your cash, state what the car is, the VIN, etc, and both parties sign it (this is more or less optional, but still good to have in case of a dispute).
Okay, once the money is counted, grab the keys, shake hands and enjoy your car!