How to Negotiate the Down Payment With a Used Car Salesman

Down payments aren't always required as a term of loan or lease approval. Borrowers can often finance the total cost of the car, including taxes and fees, depending on credit. Negotiating the down payment amount of a vehicle finance or lease is the same as negotiating the car's retail value. If you have poor credit and apply to a dealer for financing, however, the lender may require a percentage of the vehicle's value as a down payment, meaning your loan was approved but the lender requires increased equity in the vehicle.

Instructions

1

Appraise the value of the car you want to purchase. Go to Edmunds.com, the NADA Guides and the Kelley Blue Book website. All offer different values, but should offer an idea of where to start your negotiations.

2

Research the vehicle's trade-in value and suggested retail value. The trade-in value is similar to wholesale value and likely a good estimate of the dealer's cost for the car. Compare the trade-in value to the retail value to determine the dealer's profit.

3

Decide a fair profit for the dealer, keeping in mind that dealers recondition cars and run a business to make money. Aim to pay $500 over wholesale value, as financing through the dealer adds additional profit to the sale.

4

Subtract the trade-in value from your car's purchase price and add $500 for dealer profit. The result should be your target purchase price before taxes and fees. Compare your ideal cost to the dealer's price to determine how much to negotiate off of the purchase price; the decreased cost will lower your down payment requirement.

5

Tell your salesperson you'll buy the car immediately if she can reduce the purchase price to the amount you determined as fair. Explain that you don't want to provide such a large down payment and want the dealer to reduce the cost of the car instead. Allow the dealer to make a counteroffer; it may own the car for more than you estimated.

6

Agree to the car's new price, which will offset your down payment requirement, or keep negotiating. Use your readiness to buy as an incentive for the dealer to meet your request.