Can you negotiate the price of a used car in today's market?

This article has been updated from a previous version.

The Canadian used car market is gradually stabilizing. Prices have dropped about 15% from their pandemic-era peaks but remain higher than pre-pandemic levels in 2019.

Improvements in supply chains have boosted new car inventory, leading to more trade-ins and reducing pressure on used car prices. However, many buyers are still facing higher costs due to elevated interest rates and ongoing inflation.

The current Canadian market for used cars

Analysts expect prices to keep moderating but likely won’t return to pre-pandemic levels until late 2025. If you’re shopping for a used car now and can’t wait, you might wonder if you can still negotiate. The answer is yes.

Here’s what affects these price trends and what could influence them ahead.

Economic and supply chain recovery

Post-pandemic recovery has improved supply chains, increasing the availability of new vehicles. This, in turn, has led to more trade-ins, boosting used car inventory. However, higher-than-normal inflation over the past few years (inflation hovered around 8.1% in June last year) and elevated interest rates (sitting at 3.25% from 5.00% in June of 2024) have kept prices sticky.

Canadians now face average used car loan rates of 6.8%, which significantly impacts affordability. Additionally, rising household debt levels mean Canadians are being cautious with discretionary spending, slowing demand for larger purchases like vehicles.

The rise of online negotiation strategies

The internet has changed consumer shopping habits, and used car purchases are no exception. Buyers can now compare prices instantly, use chat features to negotiate, and rely on vehicle history reports to ensure transparency. Online platforms like AutoTrader.ca were found to have influenced 60% of vehicle sales. Similar players are redefining how buyers interact with sellers.

Listings with thorough documentation, such as Carfax reports, receive more inquiries, indicating how data-driven negotiations lead to better deals. For buyers, leveraging these tools not only builds confidence but also creates more room for price discussions without face-to-face commitment.

Damaged cars flooding the system

Recent flooding events, such as the devastating August 2024 floods in Quebec, which caused an unprecedented $2.5 billion in insured damages, have brought a pressing issue to the forefront — the rise of flood-damaged vehicles being sold to unsuspecting buyers.

These are vehicles that were exposed to floodwater — sometimes to the point of complete submersion. While some of these cars are written off and scrapped, others undergo superficial cleaning and repairs intended to camouflage their waterlogged past. These cars may look fine on the surface, but their mechanical and electrical systems are often compromised, leading to costly repairs and safety concerns down the road.

For those who want the confidence of buying a car with a reliable history of repairs, you may want to look into certified pre-owned (CPO) programs. These vehicles undergo multi-point inspections and often include extended warranties, are increasingly viewed as worth the higher price tag.

While it is costlier to buy, post-sale repairs when opting for CPO cars over traditional used vehicles will be much lower, if any. This program also appeals to buyers seeking reliability, particularly during a time when unexpected expenses remain a concern.

Read more: Don't get scammed: How to avoid buying a flood-damaged car

Private sellers vs. Dealerships

Private sales are still a popular option for used cars in Canada. They generally offer more flexibility in pricing, as sellers typically prioritize a quick sale over maximizing profit.

However, buyers comparing private sellers to dealerships should consider the value of after-sale services, legal protections, and financing options, which are often exclusive to dealership transactions.

“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,” says former Used Car Dealers Association of Ontario (UCDA) executive director, Warren Barnard. “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.”

The growing impact of electric vehicles (EVs)

Interest in electric vehicles is on a gradual rise. In Ontario, 10,469 new battery-electric vehicles (BEVs) were registered in the second quarter of 2024, with strong demand for models like the Tesla Model 3, Nissan Leaf, and Chevrolet Bolt.

While EVs tend to depreciate more slowly—retaining about 40% of their value after three years compared to gas-powered vehicles—buyers should still account for potential costs such as battery health inspections and installing at-home charging stations.

The growing appeal of used electric cars is further supported by government incentives aimed at expanding EV infrastructure. For example, Manitoba's Electric Vehicle Rebate Program offers $2,500 rebates for qualifying pre-owned electric vehicles, making them a more accessible option for eco-conscious buyers.

Learn more: Your car may be worth less after an accident: Learn about diminished value

Negotiating like a pro in the used car market

When it comes to negotiating for a used car, preparation is key.

Know what you want: Before stepping onto the lot, identify the car model that suits your needs, your budget, and the affordability of monthly payments (including interest rates and insurance). Understanding these specifics will help you avoid upselling tactics. For families, practicality trumps aesthetics, so don’t get sidetracked by vehicles that won’t align with your lifestyle or finances.

“Don’t get drawn in and make the purchase on an emotional basis,” Barnard 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.”

Play it cool and be flexible: Negotiation isn’t just about numbers—it’s about reading the moment. Enthusiasm can signal to dealers that you’re too invested, reducing your leverage. If a deal isn’t going your way, don’t hesitate to walk away. Dealers know they have competition, and leaving can sometimes result in a follow-up offer that’s closer to your terms.

Timing can be everything: Seasonality plays a critical role in used car pricing. For example, December and January often offer the best discounts and dipping prices, compared to peak months like May and June. Dealerships use these periods to clear out older inventory, while trade-ins from the launch of new models—typically in late summer—bring more options to the market. The end of the month or year is often the best time to strike. Many dealerships are eager to meet sales goals during these periods, making them more likely to drop their prices or include additional perks. Pay attention to clearance events and seasonal promotions, as these can also increase your bargaining power.

Ask the right questions: Negotiating goes beyond asking for a discount—it’s about understanding the terms and asking questions that can reveal hidden costs or important details. For example:

• What is included in the warranty?
• Can the dealer provide a detailed vehicle service history?
• Are there any hidden fees, such as delivery charges or admin costs?
• If it's an EV, has the battery been inspected for wear and charging capacity?

Read more: Thinking of upgrading to a 2024 Dodge Ram? Prepare to pay 408% more for comprehensive insurance

Save money in the long run when buying a used car

A used car purchase is a significant investment, but there are other ways you can negotiate to save money over time—even when the dealer is firm on the sticker price. By being strategic, you can secure long-term value while sticking to your budget.

Negotiate extended warranties and service contracts

Buyers should consider extended warranties and service contracts during negotiations, especially for vehicles with over 100,000 kilometers. These add-ons are often used to sweeten deals at dealerships, with buyers successfully negotiating warranties into the total purchase price. Other perks such as winter tires, free oil changes or even detailing services can save hundreds of dollars in maintenance costs later on. These in-kind services are often more negotiable than the price itself.

Not only do these agreements help mitigate unexpected repair costs, but they also enhance long-term vehicle ownership satisfaction.

Maximize your trade-in value

If you’re trading in your old vehicle, do your research and understand its market value. Websites like Canadian Black Book and Clutch can help you determine a fair trade-in valuation based on your car’s make, model, and condition.

Dealers often have high demand for trade-ins, particularly in tight used car markets, and this may work in your favor. Don’t settle for their initial offer. Negotiate to get the most value out of your trade-in, then apply that amount as a down payment to further reduce your used car’s cost.

For an even higher return, consider selling your vehicle privately and using the funds to increase your purchasing power.

Related: When is the right time to upgrade your car?

Inspect the vehicle thoroughly

Long-term savings often depend on the quality of the vehicle you buy.

You should not only review the car’s history report but also arrange a professional mechanical inspection. Any issues discovered—such as worn-out tires or brake pads—can be leveraged for price reductions.

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. Replacing a worn battery can cost upwards of $10,000, so always verify its condition before committing.

Lower auto insurance costs

Used cars typically come with lower insurance premiums, but you can often save even more by comparison shopping. Tools like RATESDOTCA make it easy to compare coverage options across multiple providers.

Negotiating the price of a used car doesn’t have to be stressful if you approach it with a solid strategy. Research the vehicle, understand trade-in values, and look for opportunities to save on perks, financing, and insurance. Knowledge is your best leverage in any negotiation, and patience often pays off.

Read next: 15 ways to get cheaper car insurance