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Forum: Car Buying Q & A
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How to Determine a Fair Price on a Used Vehicle....

Hi,

First, great website! Love how you boiled down that the salesman is testing if the buyer will walk, and the buyer is testing if the salesman will let him walk. Also liked the advice that the only thing that matters when buying used is the condition.

My question is as follows:
If one knows the asking price of a used vehicle, and the approximate wholesale (or trade-in price) based on its condition and mileage (through the most recent black value here in Canada), is there a general rule of thumb to determine a fair "bottom line" price?

For example, a used car I am looking at has an asking price of $17,495, and I estimate the trade-in (or whoesale) value of the same vehicle to be in the range of $12,000 to $13,000, based on its condition, mileage, and black book value. So, I estimate that the dealer is starting at a gross margin of 4,500 to 5,500, or, 35% to 45%. Recognizing that the dealer has to make a profit, is there an industry rule of thumb as to what constitutes a fair profit/price?

For example, if the rule of thumb is that a dealer has to make 25% on cost to pay his overheads and generate a reasonable profit, then I would know my bottom-line price in the above example would be $15,000 to $15,250.

Am I dreaming that it could all be so simple?

Thanks,

Dajps

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Re: How to Determine a Fair Price on a Used Vehicle....

How many times in car forums have I read " example " the dealer stole my trade for 12K and now selling my trade for $17,495,,,lol

Excellent Q that I want to include in the main body of the site with some answers as to why asking 17K is considered more than fair in many advertised ads and why some not so kosher.

In the meantime your e-mail address I wanted to reply to is not valid. you can reach me at paulsenray@yahoo.com if you want to leave a phone and get some direct answers.