How to negotiate when buying a used car

As a result of COVID-19, the automotive industry saw production for new vehicles slow down due to lockdowns, creating major demand on the used car market.

This in turn caused a steep increase in prices for used vehicles sold privately and by dealerships across Australia, but does that mean you can't get a good deal on a used car today? Thankfully, the answer is no.

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According to Moody's Analytics for April 2024, the price for used cars is on a downward trend after supply for new cars has returned and high interest rates seem to be sticking around.

The data firm claims that while 2024 won't see as much of a steep decline in used car prices compared to the 9.8 per cent drop in 2023, there is some relief in sight for buyers looking to snap up a good deal on a used car.

Drive spoke with Mick McKenna, industry policy advisor for the Victoria Automotive Chamber of Commerce (VACC), who said while there aren't any rules per se on how to negotiate when buying a used car, there are things to look out for, and ways to get a better price on your next used car purchase.

Mr McKenna told Drive knowing about the current market value of the vehicle you're looking to buy is key to negotiating.

"Be prepared to walk away" from a deal if you know you're paying too much for a car, he said, adding that dealers, "know how much wriggle room they've got".

"Take the emotion right out of it and think, can I afford it? Is the car in good condition? Is there a service history?" he explained.

"If it's not a top-selling car, I think you're in a really good position to work with the dealer on a better outcome."

There isn't a hard and fast rule on how much you can negotiate on a used car.

"There is no figure. I mean, negotiations are really hard for some consumers," Mr McKenna told Drive.

Those who are looking at purchasing a vehicle in the private car market could see sellers less willing to move on price because the owner may need to consider if a car is currently financed, how much they originally bought the car for, and how much they personally think the car could be worth.

Buying from a dealership could, in some cases, allow more freedom to negotiate on price, especially if you're shopping around the end of the financial year, the end of the year, and amid individual dealer sale events.

As mentioned previously, it's not impossible to negotiate on price when you're buying a used car privately; however, there could more factors in play as to why the seller wouldn't want to discount the vehicle significantly.

You are more likely to receive a discount on a used car from a dealership.

"[Dealers] know how much it costs to get [more] people to come and look at that car, because of through advertising and online classified providers and so on."

Additionally, Mr McKenna said if the vehicle has been sitting around the lot for a while that could open up further negotiations.

You can head over to the Drive marketplace for new, used, and demonstrator vehicles available in Australia to compare pricing and find the best deal for you.

"Know your product. Know what you're looking for, and beware of the impulse," said Mr McKenna.

"Seek the availability of the same product maybe at other dealerships so you can do a comparison." He says if one dealership across the road has one car for sale for a certain price, don't be afraid to ask for a price match.

Most dealerships will entertain the idea of negotiating if buyers have proof of their research and are serious about buying the vehicle in their lot.

Additionally, "I would just urge people to buy particularly new cars at the end of the month or the end of the financial year. That's when you're going to get your best deal."

"I'd say probably the biggest red flag to anybody when trying to negotiate to purchase a vehicle is buying privately. We do not encourage it," Mr McKenna told Drive.

"You have no consumer rights, you have no security," he continued.

Conversely, if a vehicle purchased through a dealership has issues, consumers can take the matter to the Australian Consumer Law or Motor Car Traders.

A signed contract means the dealership will offer a cooling-off period, and the buyer will have a guarantee of title once the vehicle has been paid for in full.

"If you are buying privately, you've got to do a PPSR search certificate on the car. If there's money owed on that car or it's stolen or written off, you want to know what you're dealing with," Mr McKenna said.

Some private sellers have even been known to wind back the odometer on their pre-owned vehicles to make the vehicle more appealing and sell it for a higher price.

For that reason, Mr McKenna also suggested customers "make sure that they're getting an independent mechanical report on a used car" and look into the history of the vehicle including its service books and the current condition of the vehicle, taking into account its model year and kilometres travelled.