This is a question we see almost everywhere we go online. It's usually asked about a specific car that the asker has found either online, at a dealer, or being sold by an individual.
The car's seller has set a price and the asker doesn't know if it is a good price or not, or if the seller might accept a lower price.
It's just an asking price
All used car prices are negotiable.
Let's repeat that statement for emphasis. All used car prices are negotiable.
Dealers and savvy individual car sellers know that you always set your asking price higher than the price you are willing to accept as a final sale price. How much is the price usually bumped up? Dealers might set asking price 20% - 50% higher, or more. Individual sellers may only go 10% - 20%.
If you don't know how much a seller has bumped his price over his intended selling price, and we don't know the fair market value of his car, how do you know what to pay? We just provided the most important clue – fair market value.
A seller may have an unrealistic notion of the fair value of his car. He might believe his car is worth, say $5000, and set his asking price at 10% higher — $5500. A potential buyer, knowing the seller has probably bumped the selling price up, offers $5000. The seller takes it and both parties go away happy with the deal.
So, what's wrong with the deal? If we check Kelley Blue book (www.kbb.com) we find that the car is only worth $4000. The seller, perhaps unknowingly, based his asking price on a selling price that was too high for that vehicle. He made more money than he should have, and the buyer paid more than he should have.
Let's look at another scenario, this time with a dealer car. A dealer has a car he knows is worth $4000. He would make a nice profit at that price. He puts it on his lot with a $6000 price tag. There is a good chance that someone who has little knowledge of fair market prices will come along, fall in love with the car, and pay full asking price. He makes $2000 extra profit on the deal. However, along comes a more savvy customer who knows that asking price is almost never selling price and "talks the dealer down" to $5000. Both parties go away happy. However, the dealer just made $1000 of extra profit (since the car was worth only $4000), and the buyer thinks he just got a $1000 discount.
The right price to pay
Even though there are used car price guides such as Kelley Blue Book and NADA Guides, and others, the values in these guides are just educated estimates and almost always vary between different guides. So which one is best? Which one is "right?" None are best. None are "right." That's why they are called "price guides" and not "standard prices."
Sell Your Car Instantly
The "right" price to pay for a used car is one that is fair, based on a consensus of the pricing guides and the going prices for that same make/model/year car in your area. Essentially, the right price for any car is the price that a smart informed customer is willing to pay. If a car is especially desireable, such as a good hybrid car during times of high gas prices, it may be worth a little more than guide prices, which can't always keep up with fast-changing market conditions. Or it might be worth less if it's a gas guzzling large SUV.
If the car is one for which you've been searching for a long time, and it's in great condtion, go ahead and pay more than fair market value. It's okay. Congratulate yourself and enjoy your car.
Therefore you should use used-car pricing guides as a base for making decisions about what to pay, but also add your own personal factors into the decision-making process to arrive at a price you are willing to pay.
If you will need a loan to buy your car, the "right" price is a price that your bank or ar auto loan company such as Auto Credit Express considers fair. Getting a pre-approved loan will tell you exactly how much you can borrow for the car you want. If you pay more, you make up the difference with a cash down payment.
Search This Blog
Custom Search
