Used Car Prices Are Crashing: Negotiate At Least 10% Off When Buying A Used Car in 2022

August 31, 2022

At YAA, empowering you is what drives us. Car buying, selling and ownership are too often accompanied by hassles and headaches. We do our best to save time & money with real advice from auto experts. Right now, the used car market is going through some big changes, and for the first time in 2022, buyers have more leverage. For ten weeks in a row, used car prices have declined at the wholesale level. Retail prices are softening, and we’re seeing more YAA members negotiate better and better deals.

If you’re in the market to buy a used car your goal should be to get 5-10% off of the dealer’s advertised price. In this guide we’ll walk you through what has changed in the market, why you have leverage, and how you can get that 10% off.

Let’s dive in!

Smart Dealers See the Trend; Use This As Leverage

As summer comes to a close, there are more used cars on dealer lots than at any time this year. Data from Black Book reveals that days to turn, a metric used to measure how long cars sit on the lot before selling, is increasing. At the same time, data from Black Book shows that there are more used cars for sale right now than at any other point of 2022. Supply is up.

Increasing dealer inventories, paired with higher interest rates, means that car dealers are paying more “floorplanning” cost than they have in years. Floorplanning is the interest payments car dealers make on their inventory. Just like you and me, car dealers typically finance the purchase of their inventory, which means that as inventory sits and interest rates rise, dealers have a financial incentive to negotiate and lower their prices to sell vehicles.

Unlike the past 18 months, dealers are once again working hard to sell cars. How do they do that? They lower their prices. Suddenly, with the softening of the market, more dealers are negotiating again, and many are starting to drop their used car prices rapidly. A quick look at YAA Car Search shows that more vehicles are seeing price drops. Take a look at this 2018 Mitsubishi Outlander for example.

2018 Mitsubishi Outlander price
We’re seeing more deals on YAA Car Search as the market softens. That’s a $4,000 (15%) price drop in 90 days.

Over the past 90 days this dealer has dropped the advertised price by $4,000! That’s a 15% decrease in price over three months. Wow! As you can see, the most recent price declines are more significant. This is because the dealer is feeling the pressure of increased carrying costs, and a softening wholesale market (they can’t simply go to the auction and sell this car to make money like they could earlier in the year).

Use this information to your advantage! If you went to this dealership and requested an out the door price, be prepared to negotiate an additional 10% off of that amount. Why not? You already know the dealer is desperate to sell this car. Even if you end up with just 5% off, that’s still a win! 

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The 5 Reasons Why Now Is A Better Time to Negotiate

When you go to negotiate a used car, know that these are the five reasons why they’ll be willing to negotiate with you. Feel free to even print this out and show them if they give you a hard time!

  1. Floorplan costs going up – We know that it is costing the dealer more money to hold onto their inventory than before.
  2. Demand is going down and cars are sitting on lots – Dealers who overpaid for used cars a few months ago are nervous because demand has softened. This, paired with increasing floorplan costs is a recipe for disaster for a car dealer.
  3. Dealers can’t sell their cars at the auction for a profit – Just a few months ago car dealers were selling used cars at dealer auctions for a profit. Now that option no longer exists. Wholesale prices have crashed, which means dealers are going to need to sell to retail customers, or take a HUGE hit at the auction.
  4. Retail prices are beginning to trend downward, albeit slightly –  Car dealers had been holding out. Even while wholesale used car prices plummeted, car dealers were not lowering their advertised prices. Well, that trend has reversed, and we are finally starting to see a softening in retail asking prices. 
  5. Dealers want to try and make a profit in the F&I office – Many car dealers are currently trying to sell used cars that they bought months ago for way too much money. Their best bet to breakeven on these deals is to take a loss on the front-end and to try and make it up on the back-end (finance and insurance). As long as you’re familiar with how to finance a car the right way, you should be able to get a better deal after all is said and done. 

Work with smart dealers. Some dealers just don’t look at the big picture and are oblivious to the car price trends we’re seeing right now. Not every car dealer understands that right now is the time to give up some of the profit they had planned to make on a vehicle in order to make a sale today before prices drop further in weeks to come. YAA Car Dealer Reviews and Markups.org are great places to learn what others have experienced at dealerships near you. Crowdsourcing car buying experiences is changing the game for the better!

Should I Buy New or Used Right Now?

negotiate used car prices
2022 Kia Sportage

With both new and used car prices still greatly inflated, it’s important to think about how today’s buying decisions could affect your future finances. New car prices are up 11.9% year-over-year, and 21.5% since July 2020. Used car prices climbed even higher, averaging 45% above early 2021 price levels. There’s no sign of new car prices coming down, and automakers seem to be announcing MSRP hikes weekly.

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If you’re determined to buy a new car, don’t expect MSRPs to go down at all. However, it’s worth the effort to work with dealers selling cars without markups. They’re rare, but they’re certainly out there. With MSRPs likely to increase in 2023, consider yourself a winner if you buy the new car you want with zero markups or dealer add-ons. Don’t forget, you can challenge dealer add-ons!

Better Times Ahead for Used Car Prices

On the other hand, used cars are more negotiable than at any point in time this year. If you’re looking for a better deal, here’s what you need to know: used car prices are only beginning to decrease at the retail level. There will be better deals in the weeks to come. 

While making long-term predictions is difficult right now, we’re confident that used car prices will be even more negotiable (with lower sticker prices) at the end of September than they are today. If you are in the market for a used car right now, your goal should be to negotiate 5-10% off of the sticker price, or consider waiting a few more weeks (or longer) for the market to soften further.

Is It a Buyer’s Market?

Yes. As a buyer you have more leverage than at any point in the past 18 months. Does this mean used car prices are “good” or “fair”? No way. Used car prices rose 45% in 2021, so finding a true bargain is next to impossible. Used car prices remain inflated, but for those who need a vehicle, market conditions have improved, and are likely to continue to improve. Here’s what’s clear: you have more leverage today than at any other time in 2022. 

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