When negotiating the price of a used car it’s important to know the different terms that will come up as part of the buying process. A few months ago, we blogged a used car buying guide from our own used Honda guru, Mr. Paul Wendell. Now, we’ve developed a simple definition guide of the concepts used in the car business to help you get the best price for a pre-owned vehicle.
- Asking Price or Retail Price: Both terms are synonyms; however the “asking price” is usually used by an independent seller, while “retail price” is used at dealerships. This amount will be the price that the seller or dealer is asking for the car (the one you see written online or on the car). In most cases, this price is the starting point for negotiations.
- Book Price: Many people often refer to a vehicle’s “book value” without explaining what they are referring to: Kelley Blue Book. Kelley Blue Book is a highly-regarded source for used cars. They categorize used car prices by seller: dealership, private seller, or trade-in. The “book price” or “book value” refers to the price listed for a specific car on Kelley Blue Book.
- True Market Value (TMV) Price: As Kelley Blue Book, Edmunds.com is another very reputable resource for car pricing information online. Edmunds.com employs a different technique to assess the average market-value price of used cars and sets a True Market Value or TMV. Many dealers and independent sellers use this as the guide to set their asking or retail prices.
- Trade-in Price: Even though we’re talking about purchasing a new car, I wanted to briefly touch on the term. The “trade-in price” is what the dealer is willing to pay for your car when you trade it in for a new vehicle. This price is usually close to what dealers pay for used cars at auctions.
- Wholesale Price: The “wholesale price” is what dealerships pay for a car and is not commonly used by private sellers. Most dealers are unlikely to sell you a car at wholesale price.
Use the terms to your advantage:
- Look up the Book Price and TMV Price before visiting a dealer or independent seller. Show that as the price you are willing to pay or negotiate with.
- Remember that sellers and dealerships are expecting you to negotiate starting from the Asking or Retail Price.
- When buying a used vehicle from a private seller, remember to exercise caution during the process and look up the car’s TMV private-party price. Make your offer $1,000 below and raise it in $500 increments.
- Write down the negotiated price to confirm that you have the correct number and don’t be shy about asking to repeat everything under discussion.
- Also, ask for the “out-the-door” price before agreeing so you know the exact amount you will have to pay.
Now that you have the tools to negotiate like a pro, let us know if you’re looking for a used Honda in Austin. We have the smartest sales team in Central Texas; they can guide you to a really good pre-loved vehicle and make sure you have a great experience.RSS Feed