Negotiation is a timeless art. The give and take, the unfettered capitalist spirit, the handshake agreement that brings diametrically opposed positions together – it’s almost beautiful. Businessmen and transactional attorneys build careers out of successful negotiations.
Even though most people don’t spend their days haggling over the details of complex mergers and acquisitions, negotiation is still an important skill. An expert negotiator can save him or herself hundreds of thousands of dollars over the course of a lifetime. One place where this skill is needed in its purest form is on the used car lot.
Negotiate the heck out of it!
Buying a used car is the purest negotiating scenario. A salesman with experience and latitude is trying to sell a product of dubious value. You want to complete a purchase without overspending. In fact, you would prefer to get more than what you pay for.
Your interests are diametrically opposed and there’s only one interest to haggle over. This is what the experts call a distributive negotiation. The salesman wants you to pay as much as possible and you want to pay as little as possible. As the customer, you may think you’re in the driver seat.
He needs the sale after all. What you don’t realize is that your inexperience at the negotiating table is a tool that can be used against you. It’s the salesman’s greatest weapon. Level the playing field with these three tips.
Anchor the negotiation
The anchor is your opening offer for purchase. Research has shown that the most important determining factor for a negotiation’s final price is the anchor point. Anchoring a negotiation is a balancing act. You need to make an offer far lower than you expect to settle on, but not so low that you force the salesman to walk away.
If you anchor correctly, you will set the center of gravity for the negotiation at a lower point and most likely end with a smaller payment. One of the dirty little secrets of used car sales is that the dealership has already anchored the debate at an unreasonably high level, and they’ve done this without you even realizing it. Which brings us to the next tip…
Ignore the sticker price
Sticker prices are aspirational. They are the dealership’s attempt to anchor the negotiation at a level much higher than they expect to ultimately receive. When you formulate your own opening bid – and throughout the rest of the negotiation – pretend the sticker price doesn’t even exist. It’s only there to give the salesman an advantage.
Know your reserve
A reserve is a technical term for the highest price you’re willing to pay. You want to figure out your reserve price before beginning the negotiation – but don’t share this information with the salesman. Knowing your adversary’s reserve gives you leverage. You want to keep as much information to yourself as possible during a negotiation.
If you stick to these three time-tested tips, you’ll be driving your used car off the lot in no time. Just remember to get some car insurance. You can check quotes at www.car-hire-insurance.co.uk.