The Art of the Deal: How to Haggle for a Used Car

Oct. 11, 2010 — -- Americans buy more used cars than they do new ones and that number has only gone up during this tricky economy as people try to save money. But could you still be paying too much? That's the nagging doubt in every car buyer's mind.

Cars are the second biggest thing we buy after homes, and the process can be so intimidating. After all, unlike in other countries, we don't negotiate for most of our purchases and most of us only buy a car once every few years. But good hagglers save themselves an average of 10 percent to 15 percent on this big purchase, so it's worth it to learn.

"Good Morning America" teamed up with auto website Edmunds.com and went undercover to show you, step by step, how to haggle.

Our expert was Philip Reed, senior consumer advice editor for Edmunds. Edmunds buys lots of cars for test driving purposes and Reed is the one who shops for them. He always does so on a "mystery shopper" basis, only revealing who he works for at the end.

The idea is to get a feel for the process that consumers are experiencing out in the marketplace, so that he can then give solid, relevant advice.

We were also excited to work with Reed because he has previous undercover experience. He once got a job as a car salesman and did the job for several months in order to get the inside story and share it with consumers.

On this shopping trip, our mission was to buy a certified 2007 Honda Odyssey EXL that Edmunds needed for its photography department. When Edmunds test drives new cars for its articles, staff photographers shoot pictures of them, and they wanted a minivan with a sunroof they could shoot out of.

"There was a certain amount of pressure," Reed said. "We weren't just going in and playing games with people and wasting their time. This was a car that I needed to get for my company."

To add to the tension, Reed had a budget. He was allowed to spend no more than $25,000 and he had to get a vehicle in excellent condition with low miles. All this while wearing multiple hidden cameras to capture the transaction.

CLICK HERE to read what Phil Reed was thinking during the entire negotiating process.

Before visiting dealerships we settled on 10 negotiating strategies we would employ during the process. Here they are and here's how we did.

Obviously you don't want to pay the sticker price, but where, then, to begin? There's an old negotiating adage that goes like this: "Whoever speaks first, loses." Why? Because the opening number defines the entire negotiation.

Once you throw out a dollar figure, you can't go any lower than that. That's why you want to try to get the salesman to name the first price. That way you will know you are not starting too high.

At our first dealership, I asked the question straight out: "What I was really wondering is what are you selling it for?" And the salesman obliged with an answer: "Here's our fleet price: $23,475."

That was significantly lower than the sticker price of $26,998, so it was helpful information. We would now make our opening offer even lower than that.