Negotiate from the Dealer Cost… Not from the Sticker Price
One of the big mistakes car buyers make is to negotiate down from the Sticker Price instead of negotiating up from the Dealer True Cost. While it may be difficult to get to the actual Dealer True Cost (unless the dealer shares it with you), you can get close by taking 3 to 5 percent off of the Dealer Invoice. Seriously, negotiate your car based off the dealer cost… and not the sticker price!
For a used car, you should ask the dealer to show you how much he paid for the vehicle at the auction. Many dealers will not show you this price. But for most reputable dealers, the margin they have in a vehicle’s price will be between 10 and 20 percent.
Dealers will also do things to a vehicle after they purchase it. These include repairing dents and scratches, making repairs to the engine or transmission, and many others. These cost money. Most of these contain a markup that helps the dealer make additional money.
Your best defense against overpaying for a used car is to spend the time necessary to know what the car is worth on the market. Again, Kelly Blue Book (www.kbb.com), NADA (www.nadaguides.com) and Edmunds (www.edmunds.com) are good sites for pricing research.