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The Negotiation Game: Use Your Vehicle Inspection Report Wisely

The Negotiation Game: Use Your Vehicle Inspection Report Wisely

Posted by Mark Dibdin on 16th Jan 2024

Congratulations on obtaining your pre-purchase vehicle inspection report! Armed with this valuable information, you're now in a prime position to negotiate a fair deal with the seller. Remember, negotiations are a dance – both parties want the best outcome and finding that middle ground is the key.

Reveling in a Clean Inspection: A Bargaining Ace!

A clean inspection report isn't just a piece of paper; it's your ultimate trump card. It not only underscores your commitment but also lays the groundwork for a fair pricing discussion by showcasing the vehicle's quality. Does a clean inspection report mean we haven't recorded anything? No, it means the vehicle is safe and legal to use, free of any serious defects and that the minor defects are expected for the vehicle's age and usage.

This is the reason preparation is key. Before you arrive, acquaint yourself with what constitutes a fair market price in your specific situation. Whether purchasing from a dealership, a private listing like gumtree.com.au, or at an auction, understanding the vehicle price in each market ensures you negotiate from a place of knowledge and confidence.

Be Prepared

In the realm of negotiations, stories of scoring incredible bargains circulate. However, it's vital to approach vehicle purchases with a touch of realism. The common occurrence of lowball offers, significantly below the market price, can swiftly bring negotiations to a standstill. Use a site like Drive.com.au used car valuation to get an idea of the high range you may pay at a dealer if the vehicle is in excellent condition or pay with a private deal when the vehicle is in a poor condition. Some of the factors that affect vehicle evaluations are:

  • Car Make and Model: The type of car and its specific model really matter when it comes to how much it's worth. Some brands and models keep their value better over time.
  • Car Age: Older cars usually lose their value faster than newer ones, but some classic or special cars can actually become more valuable as they get older.
  • Mileage: If a car has been driven less, it's often worth more money. This is because lower mileage suggests less wear and tear on the car.
  • Car Condition: The overall condition of the car, both inside and out, plays a big role in how much it's worth. This includes how well it runs, how it looks, and how the interior holds up.
  • Market Demand: If a lot of people in a certain area want a particular type of car, the price for that car can go up. This is because popular cars are usually more expensive.
  • Accident History: If a car has been in a crash and wasn't fixed properly or the repairs weren't documented, it can be worth less money.
  • Service Record: Having a detailed record of all the times the car was serviced can make it worth more. It shows that the car was taken care of properly.
  • Modifications: Changing things on the car after buying it can affect its value. Some changes might make it worth more, but if there are too many changes, it could be worth less.
  • Market Trends: Things like how much money people have, how much gas costs, and what kind of cars people like can change how much a car is worth. So, what people want can affect car prices. 

While a brand-new car should ideally be pristine, a 20-year-old 4x4 used off-road or a high-mileage vehicle may naturally display signs of wear. If the vehicle is tagged at the top end of the market price, it's reasonable to negotiate, factoring in these considerations. Yet, it's equally important to assess whether the seller has already accounted for these factors. The crucial question becomes, 'Is the vehicle priced reasonably given its condition, am I prepared to walk away if negotiation attempts fall short, and am I walking away because the deal is unreasonable or are my expectations too high?'

Paying Tax

When a seller initially buys a car brand new, they typically pay taxes on the vehicle. This is especially common for business and fleet purchases, accounting for over 50% of new vehicle sales annually. While these businesses can offset this tax with other purchases, they must later collect tax when selling the vehicle. Consequently, purchasing a car from a business or a dealer often increases the vehicle's overall value. Car dealers, in particular, include items such as warranties, adding to the cost.

In private sales, tax collection or payment isn't mandatory. To provide some context, in Australia, 10% of the vehicle's price represents the tax. In cases where a company sells the vehicle, they are obliged to add 10% of the purchase price to cover tax collection.

It's important to note the "new car tax," colloquially known as the forecourt tax. Although not an actual tax, a vehicle typically depreciates in value once driven off the dealership lot. This cost signifies the price paid for having the latest model or the privilege of boasting about a new vehicle purchase. Therefore, the price of a used vehicle should mirror the wear and tear associated with taxes, or lack thereof.

Tackling Minor Faults: A Play for a Better Deal

When you are purchasing a used vehicle, you have to remember that you are paying for the use left in the vehicle. The reason you are not paying full price is because the vehicle has been used and parts have been wearing out. The lower price takes into account of the wear and tear that has occurred with the current or previous owners.

Safety is not a concern with minor faults and are part of almost every inspection. Use them strategically. Politely point out these issues, noting that while they're not deal-breakers, they do impact the overall value. This opens the door for a discussion on adjusting the price to reflect the necessary fixes.

Minor faults could be trim that has been damaged, scratches on the paint, wearable components that are not past the minimum accepted standard. The seller may choose to negotiate with you on price or they may choose to fix the issues that you have raised.

For instance, the brakes might need replacement soon or perhaps the air vents have been damaged. Approach the negotiation by acknowledging these minor issues and suggesting a reduction in the asking price to cover the expected repairs. As before, do some research and find out how much the brakes are to repair, is it a $200 or a $2000 job, knowing the difference will make sure you're not out of pocket for the usage that has caused the wear and tear. This allows you to secure a better deal without overemphasizing faults that don't significantly impact the vehicle's performance.

Confronting Major Faults: Setting Boundaries

If major faults were found, approach this part of the negotiation with transparency, such as transmission issues that require attention. Approach this part of the negotiation with transparency. Express your concerns about the potential long-term impact on the vehicle's reliability, safety and value. You could negotiate for the vehicle to be repaired before you purchase the vehicle or ask for a fair reduction in the asking price to accommodate the necessary repairs. This ensures that you're not overpaying for a vehicle that needs substantial work.

Remember, throughout the negotiation process, maintain a respectful and collaborative tone. Offer solutions rather than merely pointing out problems, fostering a positive atmosphere for reaching a fair agreement. In this scenario, the highest risk lies in underestimating the severity or cost of repairs, potentially rendering the vehicle economically unviable for restoration. On the other hand, if you're seeking a project car, there might be opportunities to pick up a bargain.

Finding the Sweet Spot – A Fair Price for All

Negotiation is about compromise. Both you and the seller want the best deal, and acknowledging this can help in reaching a fair price. Use the inspection report as a reference point, emphasizing that a fair compromise benefits both parties. Be open to meet in the middle for a win-win situation.

Remember: At any stage, if you're not comfortable with the negotiations or find that the terms aren't aligning with your expectations, you have the option to walk away. Buyer's remorse often happens when you compromise too much, it's crucial to prioritize your satisfaction and ensure that the final deal reflects a reasonable compromise. Happy negotiating!