Car Deal Canada

How Much Will A Car Dealer Come Down on a Used Car

How Much Will A Car Dealer Come Down on a Used Car

Buying a used car can be an exciting yet stressful experience. You find the perfect vehicle after hours of searching online and visiting dealerships. But then comes the tricky part – negotiating the price. “How much will car dealers come down on used cars?” you wonder. It’s a common question, since most buyers want to get the best possible deal.


While dealers won’t reveal their exact markup or discount strategies, you can use clever negotiation tactics to lower the price. Preparation is key. By understanding dealer margins, doing your research, getting multiple quotes and employing compromise, you can successfully negotiate – potentially saving thousands. This guide will provide tips to master used car price negotiations with dealers in Canada.

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Average Dealer Markups on Used Cars

When buying a used car from a dealer, it’s important to understand their typical markups. This gives you a benchmark for how much room they may have to negotiate on price.

For regular used cars that a dealer purchases at auction and resells on their lot, expect an average markup of at least $2,500 over what they originally paid. This markup covers the dealer’s costs, overhead, and profit margin.

The markup includes expenses like transporting the vehicle to their lot, reconditioning and repairs, as well as business overhead like facilities, staff, utilities, and more. It also builds in a typical profit margin for the dealership.

Without healthy markups, dealers would struggle to stay in business. However, not all vehicles will have the same markup. More in-demand or rare models will likely carry higher markups. Conversely, models that are slower sellers or have sat on the lot longer may have less markup built in.

Understanding typical used car markups gives you a starting point for knowing how much negotiation room the dealer may have on a given vehicle. This allows you to make educated offers based on real market data.

 

Factors That Determine Potential Discounts

There are several key factors that impact how much a dealer is willing to negotiate on the price of a used vehicle. These include:

 

Model, Age, Mileage and Condition

The specific make, model, year and trim level of the vehicle will impact potential discounts. More popular models that are in high demand tend to have lower discounts. Older vehicles with higher mileage and more wear will typically have bigger price reductions.

Additionally, the overall condition of the vehicle makes a difference. A car that has no mechanical issues, a clean history report and minimal cosmetic flaws will be discounted less than one that needs repairs or has significant damage.

 

Market Availability and Demand

How available the particular make and model is in your local market affects negotiation room. If the dealer has trouble finding the vehicle you want, they are less likely to drop the price substantially. However, for models that are abundant, you can often get larger discounts.

Tied to availability is customer demand. A hot selling SUV that flies off the lot will typically have smaller discounts than a sedan model that has sat for weeks without buyer interest.

 

Timing of Purchase

Being strategic on when you make an offer can impact potential savings. Dealers are more motivated to make deals at the end of a month or quarter to hit sales targets. Year-end clearance events are also good timing. Avoid major holidays though, as sales goals are already met.

 

Local Trade-in vs. Auction Purchase

Vehicles acquired from local trade-ins generally have more markup by the dealer compared to ones purchased at the wholesale auction. Knowing the origin can give you insight into how much wiggle room exists on the asking price.

 

How Much Below Asking Price to Offer

When making an offer on a used car, a good rule of thumb is to start around 15-25% below the dealer’s asking price. Of course, the exact discount you can negotiate will vary depending on factors like demand and availability. However, opening with an offer in this range signals you’ve done your homework and aren’t overpaying.

To support a lower offer, come armed with pricing data on similar vehicles from other dealerships and third-party valuation sources. This provides evidence if the salesperson claims your offer is unrealistic. Having quotes in hand strengthens your negotiating position.

On the other hand, an excessively low opening offer can sometimes backfire. Dealers may dismiss initial offers 30% or more below asking as unserious and not worth countering. While you want the best deal, avoid extreme lowball offers that could end negotiations before they start.

The key is making a credible first offer based on market research, being willing to compromise, and using quotes from competitors to negotiate the price down within your target range.

 

Negotiation Tactics

When negotiating with a dealer on a used car price, having the right tactics can help maximize your savings. Here are some effective negotiation strategies to employ:

 

Have Financing Pre-Approved

Getting financing pre-approved through your bank or credit union shows the dealer you are serious about purchasing and have already lined up how you’ll pay. This takes financing out of the equation and keeps the focus on the sale price rather than interest rates or monthly payments.

 

Consider Less Popular Colors/Trims

Opting for a less common color or stripped down trim level that may not be as popular can increase your negotiating leverage. Vehicles that have been sitting on the lot longer tend to have more room for discounting.

 

Check Prices at Other Dealers

Research the same make/model at multiple dealerships in your area. Pointing out a lower advertised price elsewhere can motivate the dealer you’re negotiating with to come down in order to win the sale.

 

Buy at Month/Year End

Dealerships often have monthly or yearly sales quotas to hit. Negotiating at the very end of a month or calendar year when these targets are top of mind can pressure the salesperson to close the deal at a lower price.

 

Convince You’ll Buy Today at Target Price

Communicate that you are ready to purchase immediately if the dealer can meet your desired price. Making it clear you’ll finalize the paperwork today if they can match your target increases your leverage versus making a tentative offer.

 

Fees and Trade-In Value

When negotiating the price of a used car, it’s important to consider all the costs, not just the sticker price. Dealerships often charge administrative fees, documentation fees, safety inspection fees and more that can add a few hundred dollars to the bottom line.

For example, a dealership may charge a $299 documentation fee plus a $150 safety inspection fee. Suddenly your $15,000 negotiated price becomes $15,449 once you factor in the fees.

It’s important to ask the salesperson to disclose all fees upfront so you can factor them into the negotiated price. Don’t forget taxes and licensing costs as well.

If you’re trading in your old car, get quotes for its value from sites like Kelley Blue Book and Edmunds. This allows you to negotiate the trade-in amount so you maximize its value. Dealerships often lowball on trade-in offers because it gives them more room to mark up the car for resale.

Having the trade-in value pre-determined based on market data allows you to push back if their offer seems too low. Aim to get as close to the quoted trade-in price as possible so you don’t leave money on the table.

 

When to Walk Away

You’ve done your research and made a reasonable offer based on comparable vehicles. But if the dealer won’t budge on a price that seems fair, it may be time to walk away.

One of the most common negotiation tactics dealers use is claiming your offer is impossible or that they “can’t go any lower” on a price. Don’t let them pressure you into accepting a higher price than your research indicates is fair. Be ready and willing to walk out the door.

Similarly, be wary if a salesperson starts employing high pressure or manipulative sales tactics to get you to sign. Saying things like “this deal is only good today” or “this car won’t last until tomorrow” may be a sign they care more about making a quick sale than finding you the right vehicle.

Trust your research. If the dealer can’t come reasonably close to a fair price, it’s okay to politely leave. Let the salesperson know you’re still interested in that model and to call you if they can meet your offer. There are many dealerships and vehicles to choose from, so never feel trapped into overpaying.

 

Getting a Second Opinion

Buying a used car is a big decision that involves a lot of money changing hands. With so much on the line, it’s smart to get a second opinion before signing anything. Here are some tips:

 

Take a day to sleep on an offer. Salespeople will sometimes pressure you to commit right away with claims that the deal is only good for today. Don’t fall for this. Go home, sleep on it, and return the next day with a fresh perspective.

Discuss with family/friends. Talk it over with people you trust to get another viewpoint. But make sure you give them all the details like mileage, condition, price comparisons etc. so they can offer informed advice.

Check online car buying forums. Search for the specific used car model you’re looking at to see what others paid. This can reveal if you’re getting a good/bad deal compared to real world examples.

Get an inspection from your own mechanic. For a few hundred dollars they can thoroughly inspect the car and give you an independent assessment of its condition before you commit to buying.

Ultimately the decision is yours alone to make. But leaning on others for a second opinion can give you added confidence that you’re making the right choice.

 

Checking the Paperwork

After going through the negotiation process and agreeing to a price, your work isn’t done yet. Before signing any paperwork, be sure to carefully review the entire contract. Check that the negotiated price, trade-in value, fees, and other terms you agreed to verbally are all accurately reflected.

Read the fine print too, paying close attention to:

 

  • Interest rate and loan terms if financing
  • Documentation fees or administrative charges
  • Add-ons like extended warranties
  • Assessment of registration fees and taxes

 

If you notice any discrepancies between what was promised and what is on the contract, speak up right away and get clarification from the finance manager. Don’t be pressured into signing until you fully understand every item and fee, and ensure the terms match your negotiation. Being diligent up front prevents surprises down the road.

 

Following Up After Purchase

After you’ve purchased and driven off the lot with your new used vehicle, it’s important to follow up with the dealer if any issues come up. Brand new vehicles typically come with a manufacturer’s warranty, but used vehicles may only have a short warranty from the dealer, if any. That means it’s crucial to identify and report any problems as soon as possible.

Give the salesperson a call right away if you notice any mechanical issues, hear unusual noises, see warning lights come on, or experience any other problems with the vehicle. Don’t wait and assume it’s nothing – you want to create a record of the issue while it’s still covered under warranty. The dealer may recommend bringing it in to have their service department inspect it.

It’s also a good idea to have your own mechanic look over the vehicle within the first week or two if you didn’t get a prepurchase inspection. They may catch things you missed and can provide a second opinion on any problems the dealer identifies.

Additionally, once you’ve had some time to drive the vehicle and get a feel for it, leave an honest review of your purchase experience online. Dealership review sites allow you to rate various aspects like customer service, pricing, finance process, and more. This helps provide valuable feedback so they can improve.

Following up quickly on any mechanical issues and leaving a review lets the dealer know you’re a vigilant buyer. This can encourage them to back up their sale with quality service, especially if problems are still covered under warranty. Don’t hesitate to speak up – you want to get your used vehicle purchase off to a smooth start.

 

Being Ready to Negotiate

Getting the best deal on a used car purchase requires coming to the negotiation informed and ready. Here are some key ways to prepare:

 

Do Your Homework on Pricing, Options, Condition

Research the fair market value for the specific make, model, year and trim you want. Resources like Kelley Blue Book and Edmunds can provide price ranges based on mileage and condition. Knowing the typical selling price gives you a baseline for negotiation.

Also, inspect the vehicle thoroughly and note any flaws, damage or missing features. These can be used later as justification for a lower offer. Check the options it has and compare to similar vehicles to determine if the asking price is in line.

 

Get Financing Approved in Advance

Having financing pre-approved shows the dealer you’re a serious buyer who has done their homework. It also takes away the dealer’s leverage if they were hoping to make money by financing the vehicle for you. Shop lenders and get pre-approved before entering negotiations.

 

Check Multiple Dealerships

Contact several dealers in your area that have the vehicle you want. Get quotes from each one to see where pricing differs. Having offers from competitors gives you leverage when negotiating with a particular dealer. Let them know you’ve shopped around for the best price.

 

Sample Negotiation Scenarios

To give you a better idea of how negotiating can play out, here are a couple examples of getting discounts on used cars:

 

2021 Honda Civic

Maya was looking for a used 2021 Honda Civic LX with around 40,000 km. She found a listing at her local Honda dealer for a 41,000 km Civic LX listed at $23,500. Knowing Civics tend to retain value well, she still thought the list price was high.

After checking autoTrader and listings at other dealers, she saw prices ranging from $21,000 – $22,500 for similar Civics. She also knew the 2021 models were in less demand than the redesigned 2022 Civics.

Maya went to the dealer and test drove the car. It was in good shape and she was ready to buy. When they started negotiating, she made an offer of $20,500, knowing it was lower but in the typical discount range. The salesperson countered at $22,800. After going back and forth a few times, emphasizing that other dealers had better prices and that she had financing ready, they settled at $21,700 before taxes and fees.

 

2018 Toyota RAV4

Dan was looking for a used 2018 Toyota RAV4. He found a dealer listing for a LE model with 60,000 km priced at $27,990. Looking at various sources, he saw 2018 RAV4 LE models ranging from $25,000 – $28,000 depending on mileage and condition.

When Dan went to test drive the RAV4, he noticed some minor scratches and wear on the interior. He pointed them out to the salesperson and said he’d offer $24,500 due to the imperfect condition. The salesperson came back at $26,700 but emphasized the Toyota certification warranty and service package they were including.

Dan reiterated the scratches and wear and said he knew they likely got the car at auction for around $22,000 based on its specs. After going back and forth a few more times, and getting the sales manager involved, they settled on $25,300 before taxes/fees. Dan was satisfied getting a good certified RAV4 below average market prices.

 

The Bottom Line

Getting the best deal on a used car requires preparation, research, and negotiation skills. While dealers won’t reveal exactly how much they’ll discount a vehicle, arming yourself with information like typical dealer margins, pricing from other similar vehicles, and wholesale values gives you leverage when making offers.

Remember to take a realistic and fact-based approach – very lowball offers may be dismissed outright. Come to the table with evidence from pricing guides, quotes from other dealers, or examples of similar vehicles listed for less. This supports your position during the negotiation.

It also helps immensely to show you’re serious and ready to buy with approved financing in place. Dealers are much more motivated to “sharpen their pencil” when they know you’re a committed buyer.

While there’s no magic percentage that sellers will come down, the combination of doing your homework on fair pricing and employing good negotiation tactics gives you the best shot at maximizing your savings.

 

Conclusion

Getting the best deal on a used car involves preparation, research, and negotiation. While dealers won’t reveal exactly how much they’ll discount a vehicle, understanding factors like their margins, inventory levels, and pricing trends allows you to make educated offers.

Remember to consider all costs like admin fees and get quotes from other dealers for leverage. Test drive the vehicle thoroughly and have a mechanic inspect it before purchase. Always get everything in writing on the sales contract and follow up if issues arise afterwards.

With the right approach, information, and reasonable offers, you can successfully negotiate with a dealer to maximize the value you get for your money. This guide provided key tips on what to research, how to set target prices, negotiation tactics, and when to walk away.

Now that you’re armed with inside knowledge on the dealership process, you can feel empowered to get the best possible deal. With preparation and patience, you’ll drive away with a great used car at a discounted price.

 

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Questions About How Much a Car Dealer Will Come Down

The amount a dealer is willing to negotiate on a used car price will depend on a few factors, but on average you can expect them to come down 5-10% from their initial asking price. Research the used vehicle’s market value ahead of time to determine a fair price to offer. Come prepared with financing already in place as that can give you more leverage to negotiate.



The average dealer markup on a used vehicle in Canada is around 10-15%, however this can vary quite a bit depending on factors like the age, mileage, condition and popularity of the vehicle. Luxury and specialty vehicles tend to have higher markups. Do your research on pricing and know what the car is worth before negotiating.

Since certified pre-owned cars have passed rigorous inspections and often come with additional warranties, dealers tend to have less room to negotiate prices. Expect around 2-5% off a CPO vehicle in Canada. Focus negotiations on extras like winter tires, rust protection and extended warranties which have higher profit margins.

While paying cash won’t help you get an upfront discount, it can help strengthen your negotiating position. Come prepared with bank records proving you can pay in full. This takes financing out of the equation allowing you to focus negotiations strictly on the sale price. Cash buyers also save significantly by avoiding interest charges.

The used car negotiating process typically begins with the customer making an initial offer below asking price. The salesperson may make a counter offer. The buyer then responds with another counter offer, and this back and forth continues until a compromise is reached or you walk away. Come prepared having researched fair market prices and know the maximum you are willing to pay.

Watch out for extra fees dealers try to tack on to the purchase price during negotiations. These can include documentation fees, safety certification charges, etching fees, nitrogen fills for the tires and more. Refuse to pay any unreasonable fees. Get all agreements regarding extras in writing before signing paperwork.

Finding the invoice price and incentive data requires doing some research first. Good sources include Unhaggle.com, CarCostCanada.com, AutoTrader.ca and manufacturers’ websites which outline current offers. You can also call or email dealers to try to get invoice pricing. This information helps strengthen your negotiating position.

On average, customers in Canada tend to negotiate new vehicle purchases around 8-10% off the manufacturer’s suggested retail price (MSRP). When prepared with invoice pricing data and available incentives, it’s possible to negotiate 10-15% off. At a minimum try to pay no more than 3% above dealer invoice cost.

More popular vehicles that sell quickly, such as trucks, SUVs and CUVs, will typically have less price negotiation room. Around 2-5% off MSRP is common. Less popular sedan models can offer 10% or more off. Do research on sales volumes and inventory levels of the exact make and model you want for clues into leverage.

Making the first offer below asking price starts the negotiating process on your terms, allowing you to anchor expectations. The dealer can then counter and negotiations progress from there. If you don’t make the first offer, the salesperson may open with a high price hoping you’ll counter significantly below that. Get discussions started off around your desired price point.



The best times for used car deals are typically at the end of each quarter when dealers push to meet sales quotas. Shopping on the last week or two of March, June, September and December can yield the biggest savings, especially on older model year vehicles. Other good times are at the end of each month or during typically slower retail seasons.

Effective negotiating tactics include getting quotes from multiple dealers on the exact vehicle you want, focusing negotiations on the vehicle sale price rather than monthly payments, saying “no” to all extras initially then negotiating them down one by one, waiting for the dealer’s best and final offer before countering, and being willing to walk out if you don’t receive fair value.

Research current incentives and rebates available in your region on the make and model you want. Print these out and use as leverage, making it clear you expect these to be factored into the selling price on top of any additional discounts the dealer can offer. Time your purchase right and stack multiple offers for maximum savings.

First, find out the residual value and buyout amount stated in your lease agreement. Research the vehicle’s current market value and offer the dealer a bit under that if higher than your buyout price. Point out issues with wear and tear. Be prepared to buy out the lease and sell to a third party yourself if the dealer won’t negotiate.



Get educated on pricing, go in with confidence knowing what the vehicle is worth, and don’t be afraid to counteroffer multiple times. Bring a man for reinforcement if needed. If you feel dismissed or disrespected, call them out on it or walk out. Leverage competition by getting quotes from multiple dealers then use the lowest price as bargaining power.

The optimal time to make your initial offer is after the test drive once you have confirmed interest in purchasing the vehicle. At this point the salesperson has invested time in you and will be motivated not to lose the potential sale. Making an offer right away can signal you are still just browsing rather than intending to buy now.



Tips for buying a used private sale car include checking comparable pricing on AutoTrader.ca and Kijiji listings, pointing out any flaws, keeping discussions focused on the asking price rather than payments, making a firm initial offer then using silence rather than speaking first after any counteroffers, emphasizing you have cash in hand, and being willing to walk away.

Creative haggling tactics include negotiating on the entire vehicle price including taxes/fees rather than just the list price, asking for free extras like winter mats/tires, requesting free future services, trading-in multiple older vehicles, getting quotes from several dealerships then leveraging them against each other, and waiting for year-end clearance sales.

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