If you are thinking about a new car you need one crucial piece of information no car buyer should be without: the dealer invoice.
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MSRP
The dealer invoice is the price the manufacturer charged for the new vehicle. The Manufacturers Suggested Retail Price, that every dealer displays in the window of a new vehicle, is the price the manufacturer recommends the dealer charge new car buyers. This MSRP also includes any and all options you may want in your new vehicle. The more options you want, the more (sometimes much more) you can expect to pay for your new car.
The MSRP can often differ from the dealer invoice by a significant amount. If you want the best deal on your new vehicle you have to know how much the dealer actually paid for it before you can haggle over the price you will pay for it. Every dealer expects to make money on the vehicles they sell. There is nothing wrong with that. How much they make, and whether you can get yourself a better deal on the car of your choice is the most important thing.
Finding the Dealer Price
Once you identify the vehicle you want to buy you can start looking for the dealer price. Begin your quest for knowledge online where dealer invoice prices are often posted. You can access this information without supplying any personal information of your own, or committing to buy any particular model. You might notice a big difference between the invoice price, the MSRP and the sticker price in the window of the car you want. This has to do with discounts called dealer incentives.
Incentives
Dealer incentives are provided by the manufacturers to dealers who buy a certain model at a certain time. These special discount amounts may or may not be passed on to buyers. Usually they are more profit for the dealer. The manufacturer will also offer a percentage of the price, just 2 or 3 percent, to the dealer for every new car they sell.
So, the invoice price, minus the dealer incentive, minus the dealer hold back is the dealers actual cost. Start adding these numbers up and you will see right away, there is always room for haggling when it comes to buying a new car. But you need the right information to know how much haggling can be done.
The MSRP should be considered the base price of your vehicle. Once you start picking out options, that price will likely increase, significantly. Avoid options that you don’t need or that you could have done by someone else for a whole lot less money.
The best rule of thumb, when it comes to negotiating the best price on a new car is to set the target at something below the car invoice price. Once you know your target, hitting it becomes that much easier!
