By Josh RosenbergRecently, on March 28th, 2024, I bought this one-owner, clean-Carfax, 2021 Acura RDX with only 23,600 miles, and 11 months of its factory warranty remaining, for $25,072. This was $5,347 below its Edmunds.com retail value ($30,419), and even $1,075 below its Kelley Blue Book trade-in, or wholesale, value ($26,147). It was quite a deal.
I've done the same over the past 15 or so years covering my last 5 used car purchases. So have many of this website's visitors ... although maybe not always getting this crazy of a deal (myself either), but always paying significantly less than what most others are paying.
And a lot of it can be heavily influenced by whatever state the economy is in at the time. So, we'll start there.
And the current car market and economy has taken on a condition that is definitely more buyer-friendly going forward, where dealers have been dropping prices, and sometimes drastically.
I'll detail the process for getting these great prices below. It's actually surprisingly easy. But first ...
Here's the facts on the current status of the used car market that has opened up the current opportunity.
Here's What's Happening Right Now In The Used Car Market
After a two-year run of historically high used car prices due to the pandemic and the lack of supply it caused, prices are finally falling. They fell 7% in 2023 and are now down 21% since their peak in 2021.
There's a couple reasons why. First and foremost, inventories have normalized, so there is a much better, and pro-buyer, balance of supply and demand.
In addition, high interest rates are holding some buyers back, causing a further decline in demand.
And lastly, there are now plenty of new vehicles available. A couple of years ago, they were few and far between, forcing buyers to turn to used cars which caused pricing to ramp up high and stay there. Some buyers are now returning to new cars, softening the used car market.
From industry sales authority Cox Automotive (June 6, 2024) on prices paid at dealer auctions:
"The major market segments all experienced seasonally adjusted prices that were down year over year in May. Compared to May 2023, pickups and luxury were the only segments that outperformed the industry, down 11.2% and 11.4%, respectively. SUVs declined by 13.2% year over year, midsize cars were down 16.3%, and compact cars were the worst-performing segment, falling by 17.4% against last year. "
While the actual prices used cars are selling at is difficult to know in real time, the prices dealers are paying for cars at their dealer-only auctions is published by Manheim, their nationwide wholesale auction company. And dealers are paying less because they must be selling them for less.
And again from Cox (June 18, 2024):
"All major market segments saw seasonally adjusted prices that remained lower year over year in the first half of June. Compared to the industry’s year-over-year decline of 8.5%, the pickup segment was the only group to outperform the index overall, falling by 7.5% against 2023. The remaining segments did worse year over year, with SUVs down 9.2%, luxury falling by 10.0%, midsize cars declining 10.1%, and compacts performing the worst at down 11.2% year over year."
And perhaps CarEdge (July 1, 2024) sums it up best:
"Used car prices are falling as we head into summer 2024, and in all likelihood, we’re just getting started. According to the most recent used car market update from Black Book, prices and trade-in values are softening as buyers turn their backs to high APRs and high prices. However, June brought the largest wholesale used car price decline since January."
All of this is not to say business is bad for used car dealers. Prices are still elevated compared to pre-pandemic and overall they are doing just fine as they adapt to the fact that prices aren't as ridiculously high as they were and negotiation has returned.
But clearly, this easing of demand, along with higher loan interest rates, has opened a significant opportunity for buyers.
So, Who's Getting The Best Deals In This Environment?
Well, it's certainly not those who walk into a dealership to negotiate. That's too "old school" and a big mistake in this day and age. These aren't the buyers getting the best prices.
No, the biggest discounts are going to those buyers who are using the available online price and research tools, and most importantly, those getting multiple dealers into an online competition for their business before ever setting foot in a dealership. These are the most prepared and rewarded buyers.
So, Know How To Get The Lowest Price
What you do is just go to a car site, (I happen to use CarsDirect.com for their massive dealer participation and ease of use) and find several listed vehicles that you may be interested in.
Then write something like the following in the "Check Availability" box or "Contact Dealer" box or whatever the site you are using uses.
"Hello, I've contacted several dealers about cars I am interested in and am looking for the best value. I am also a serious buyer planning to make a decision soon. Please send me your best out-the-door price. Thank you.
After receiving the offers, follow up by explaining that based on the price, you're leaning in another direction but still really like their car and would certainly consider a another offer. When dealers drop out, you'll know you're at the best price.
Using the internet to get dealers to compete for your business this way is extremely effective.
More Details:
Most dealers respond quickly by email or text, although it's possible you may get a call. In my most recent purchase, I got one call out of 6 dealers, and I told him I'd prefer doing this via email or text until I was closer to reaching a final decision, and he was immediately fine with that. But you can do this by phone as well, if you want.
In my first online responses to each dealer, I simply explained I was a serious buyer who has contacted dealers on a handful of vehicles I am interested in and am simply looking for the best value.
It doesn't matter if they are different brands, or have different features, or different mileage at all. What's important is that they now know they are in a competition for your business.
And very importantly, I ask them to skip all the back-and-forth and simply send their best OTD (out-the-door) price, including all fees.
You will get questions about whether you have a trade and whether it's paid off, but it's best to keep all that for later ... after you've eliminated those no longer of interest to you. It's best to keep these separate. More on trade-ins later.
Although, while you are there, it's a good idea to get the up-to-date trade-in value of your current car. You'll probably see the form there or you can find it here at Edmund's Trade-In Quotes.
It's actually surprisingly accurate. I think this is because the inputs include either your plate# or VIN# followed by many simple, but specific, yes/no questions. It really focuses in on the detail of the specific vehicle. Still, it just takes a couple minutes. Free too, of course.
There's more on this process below and how to respond to the OTD prices that's likely to then get a second round of lower quotes, but first, here's why this is so effective:
The 5 Reasons This Works So Well
1. Dealer Competition: As soon as dealers know they are in a multi-dealer competition, they also know they're going to have to be very price competitve to win your business.
3. Transparency: Getting multiple dealers involved online encourages price transparency. Dealers are more likely to provide clear and competitive quotes when they know they're being compared to other options.
5. Incentives and Promotions: It is not unusual for different dealerships to offer various incentives or promotions at different times, often when trying to reach an internal, bonus-paying goal. Wrapping things up at the end of the month or week can sometimes really pay off. So the more dealers participating, the more likely a buyer is to run into a dealer needing to reach a goal, and sometimes multiple dealers.
6. Very Little Stress: There's little or no stress because you are doing this from the comfort of your own home or office, so there's no sales pressure and the buyer is actually the one in control.
7. Access To Information: You'll have all the resources of the internet at your fingertips to study the offers you are getting or to research any questions you may have as opposed to being more limited while sitting at a salesperson's desk.
More Details On This Process
The Response
When the dealers reply via text or email, you can respond by saying something like:
"I've contacted several dealerships about vehicles I'm very interested in. I am a serious buyer and I'd like to skip all the back-and-forth and get right to the bottom line so we can both save time. What is your lowest out-the-door price, including all fees? I'm looking for the best value out of the vehicles I've selected."
While most dealers will contact you by text or email, if one does phone, you can just say something like:
"Thanks for getting back to me, but I'm corresponding with several dealers and until I'm further along in the process, I prefer communicating through text or email. So, please send me your best out-the-door price, including all fees."
The above response also works well with dealers who tell you to come to the dealership to discuss it and look at the car. Also, as said earlier, leave any trade-in you may have out of it initially. More on this shortly.
And it's perfectly alright to get quotes on entirely different makes and models. While the dealers know you won't be comparing exact apples to apples, the most important thing is that they know there are vehicles at other dealerships that are very much in the running. Differing models, mileage, features, fuel economy, etc., are secondary to the fact that each dealer sees that you are also interested in other vehicles.
After getting your response following their first contact, you will very likely see their prices drop, and sometimes to great prices immediately.
(Incidently, this method is also used very effectively on "new" cars. Here's where to get the details on how to get the best price on a "NEW" car in the current economy.)
As you receive your prices, often already lower than the one advertised due to the competition factor, here's a sample response that typically results in a new round of lower offers:
"Right now I am interested in several vehicles and will buy soon depending on the best value. I really like your car, however, right now I'd have to say I'm leaning in another direction. But I'd certainly look at another offer if you'd like to make one. It's up to you."
And you'll probably get that offer. Also, the nice thing is that you are just being upfront about how you are feeling about different choices, but because each dealer knows they might lose the sale, there's a very good chance of a further price drop.
And once that is received, and you let it sit for some hours or even a day or 2, you can respond with something like:
"Well, if that's as low as you can go, I'm just not comfortable at that price. I just feel I'm getting a stronger value somewhere else, even though I think I like your car better. I'd certainly look at another offer though if you can make it today because I really need to buy at this point."
And you can continue this process until they stop making counter offers. When that happens, you've won ... you know you're at their very lowest price. You'll usually have a great price. And sometimes a crazy price.
So now, if you think you want to purchase the car, you can say something along the lines of:
"Okay, I will accept your offer of $xx,xxx as long as it passes my inspection and test drive, and if we can come to an agreement on my trade-in (if you have one)."
The Trade-in
If you have one, obviously you want to receive a fair trade-in price for it. So first of all, know its value. There are many sites that will give it to you. And you want to use your VIN or plate # to get the most accurate results.
But in my own experience, I seem to be getting the most accurate appraisals at Edmund's Trade-In Quotes. It takes about a minute longer than others, but they ask more questions to get what I think are better results.
All of these services are free so you definitely want to do that.
And, as said earlier, you want to keep this as a separate transaction for after you've reached a price agreement on the vehicle. You'll likely be asked early in the process if you have one. If you do, you can respond with something like:
"I really don't want to mix things up with all that now. I prefer to agree on the vehicle price first. Then we can talk about a trade, if I decide to go that route."
The reason to do this after agreeing on a vehicle price is because it puts more pressure on the dealer to offer its fair trade-in value. They know you've already agreed to buy the car and they don't want to blow it now.
So, now you can tell them about your vehicle and mileage, and give them the VIN. They won't be able to commit to a price until you bring it in, but you can ask them for an estimate based on what you have told them (be accurate).
If their number is low, tell them that, based on the fair numbers you've gotten yourself. In my own example at the top of the page, I knew my trade was worth in the $13,000 to $14,000 range (trade-in values are always somewhat subjective).
So, I said I'd come to the dealership with the intent to buy if they would first confirm the final trade number was in the $14,000 range. And they agreed that was the fair value based on what they knew, pending them looking it over.
So, I brought it in, they inspected it, and we agreed on $13,500, right what I was expecting. And we closed the deal.
Dealer Fees
I hate dealer fees, but there's nothing a buyer can do about them here in Florida. I'm not sure of other states but here they are non-negotiable. Legally, if a dealer has one, and they almost all do, they have to charge it to all of its customers, and it has to be the same amount. So, they legally can't waive it or even reduce it in the negotiation process.
But that's okay. Just get the vehicle price reduced by at least that much to offset it. I paid a $999 dealer fee for the RDX, but it was okay with me given the final negotiated price. In other words, pay the fee but get it back during the process.
Add-Ons
Initially undisclosed "add-on" items seem to be everywhere now. These include things like LoJack, a fancy rustproofing service, and so forth. If you want these things, that's up to you. But if you're getting a good price on the vehicle and now there are all these add-ons piled on, there goes the good deal.
I had one dealer with a good price but with $3,000 worth of add-ons. Basically, they were using the vehicle as almost a loss-leader and made their money on everything else.
If they tell you they can't drop them, it's a very good indication that you want to move on to another dealer, because they can drop them. That's a definite loss of credibility and trust for me.
Even the dealer I bought from started with a $1,200 rustproofing add-on. Then they said they'd give me a better price for it. And when I said I simply didn't want it and wouldn't buy the car with it, they dropped it completely.
So, don't just accept add-ons. Buy only those you want, if any (and you can probably negotiate the prices of them), and have them drop the rest if they want your business.
Finding Good Deals
When you are looking for cars at CarsDirect.com or anywhere else, of course you can sort them from low price to high to quickly locate those that may already have a cost advantage.
But also, try sorting them by "Date Listed: Oldest First". While you can get good deals on any car, those that haven't sold in weeks or even months are usually very good candidates for further price concessions. Dealers often have financing charges on them plus carrying costs and are more likely to just want to cut them loose.
One-Price, No Haggle Dealers
These can be great for many people, but they rarely have an outstanding price. I've found they usually have pretty decent deals which may be worth it for car buyers who just want to go and buy and trade-in with as little hassle as possible. And they are very good at that.
Right now at a nearby CarMax, for example, they have an identical 2021 Acura RDX as the one I bought above for sale at $28,998 ... that's nearly $4000.00 more than I paid, plus it has an additional 15,000 miles on it.
Is it a good deal? Well, it's below the current retail on it, so I'd say it's an okay price. But it still isn't close to others I was considering.
Overall, for people who want an easy experience, it's fine. But I've found that many people are also fine with exchanging emails to get a much better price. Not only do most find it interesting and rewarding, but many have told me it was even fun, unlike their previous car-buying experiences.
So, Where To Do This?
As stated earlier, my personal favorite used car listings are at CarsDirect.com because of the absolutely massive dealer participation there as well as how quickly and easily their process works.
After you select your make and model, you can then further fine-tune your search by specifying model years, dealer distance, additional makes and models, and so forth. What you want to do ideally is locate a minimum of 4 or 5 vehicles (the more, the better) at different dealerships to create the competition.
As you find vehicles at prices you are interested in, just click the "Check Availability" button to start the process.
I hope this has been helpful. Have fun with it ... and let me know how you do.
All the best - Josh