The pandemic created a huge demand for cars due to people leaving cities and not using public transit as much. But the resulting supply chain delays means that consumers may have to wait for a new car for up to a year.
Many have turned to used cars instead, which has driven up prices by nearly 50%.
In such a competitive and inflated market, is it even possible to negotiate the price of a used car anymore?
A tough negotiating market for used cars
Negotiating isn’t easy right now with the huge demand for used cars, says Used Car Dealers Association of Ontario (UCDA) executive director, Warren Barnard. Used car prices have crept closer to those of new cars.
“The price you see listed on online marketplaces that you might see from a dealer, there’s likely not a lot of wiggle room around there,” Barnard says. “The dealer has paid a lot more than they normally would have for that vehicle, so don’t think that the dealer is gouging the prices. They’re not.”
Barnard adds that negotiation is easier if you come prepared with your research. If you have seen several used car dealers selling the car you want, you can use that as leverage.
Find ways to save money in the long run
If your used car dealer will not budge on price, another way to negotiate with them is getting them to throw in perks that will save you money in the long run. Barnard suggests asking for in-kind services, like winter tires or oil changes.
Another way to reduce the costs of the vehicle is to trade in your old vehicle. The dealer will take money off your used car purchase based on the value of your old car. Because there’s high demand for used cars right now, you’ll get “top value” for your trade-in, Barnard says.
Asking good questions can also save you money in the long term. Barnard recommends looking into things like the mileage of the car or, if it’s a used electric or hybrid car, the quality of the battery, since this is a very expensive part to replace.
And while you may not be able to save money on the purchase price of a used car, you can save on the insurance costs for it. Comparing car insurance rates from multiple providers will ensure you’re getting the lowest premium for your coverage needs. And the good news is: used cars tend to be cheaper to insure than new cars since their overall value / cost to replace is generally much lower than that of brand new vehicles.
Negotiating sometimes means not giving into pressure
The most important thing when trying to save money on a used car? Know what you want.
Barnard recommends knowing these three things before you go in to buy a used car:
- The car model you want
- The price point you want
- The monthly or biweekly payments you can afford, including interest rates and insurance (you can calculate insurance rates for Ontario vehicles online easily.)
Barnard says it’s not enough to just to know these things, but to stick to them.
“Don’t get drawn in and make the purchase on an emotional basis,” he says. “It’s very easy when you fall in love with a car. If you’re looking for a vehicle to transport the kids to soccer, then you don’t want a two-seat roadster.”
Most importantly: don’t panic.
“The market will eventually come around,” he says. “But, boy, it’s taking a while.”
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