Purchasing a used car, like any negotiation, is a "process and not an event". The Shapiro Negotiations Institute uses a process based on the Three P's: Prepare, Probe, and Propose.

Prepare: The best source of information when preparing to buy a used car is Kelly Blue Book or Edmunds, both are available on the internet. These sources provide the "standard" value for the make and model of the car you are purchasing. However, depending on the condition of a particular used car, it could be worth substantially more, or even less than the value stated by these sources. Regardless, when preparing to purchase a used car, Kelly Blue Book or Edmunds is the first place to turn.

1. Why is this car priced above (or below) the Kelly/ Edmunds Value?
2. How long have you had this car on the lot?
3. Do you have the factory report? (indicates recalls or warranty repairs)
4. Do you have the vehicle history report? (indicates history based on VIN #)
5. Do you have the repair history report? (indicates major/minor repairs)
6. Can I see the actual inspection ticket (indicates who/what/where/when of inspection)
7. Is the vehicle certified? What is the extended warranty?
8. What is the dealer warranty? 30, 60 or 90 days?
9. What additional services do you offer? Free towing? Free oil?
10. Have you offered or are you planning to offer any specials? Holiday Sales?

The answers to these questions will help you understand the condition of the car; help in determining what support the dealer is willing to provide after the sale; and establish reasons for price reductions moving into the Propose phase of the negotiation.

Propose: Once you've determined the "standard" price and asked the questions above, it's now time to enter the proposal. This is when you point out to the dealer the areas where the car or the dealership is lacking and ask what price reduction the dealer is willing to provide. For instance, if the vehicle history report reveals frequent repairs or the dealer is not willing to provide information of services; what reduction in price is the dealer willing to offer? If the vehicle is not cerified, or if the dealer does not provide services like Free Oil or Free Towing like other dealers, how much discount are they prepared to offer? Remember, let the other side make the first offer, do not accept their first offer too quickly, and when you are making an offer "aim low:"

The more alternatives you have, the more room you will have to negotiate. We suggest that you look at franchised dealers who sell new and used cars, as well as independent dealers. Independent dealers will not provide the same amount of information or service prior to sale as a franchised dealership. One tactic is to play the franchised dealership off of the independent dealer, asking the franchised dealer to provide all the services at the same price as the independent dealer, or asking the independent dealer to lower their pricing to make up for the lack of information about the car prior to the sale, or lack of service after the sale. Ultimately, using the Three P's process will help you make an informed decision to negotiate the most effective deal.

Source: SHAPIRO NEGOTIATIONS INSTITUTE – "Using the Three P's to Negotiate a Used Car Purchase"