Car Buying Tip#9
More Cars Guide for the Uninitiated
Dealer Invoice Price is the price printed on the dealer’s invoice from the manufacturer. However, this isn’t necessarily what the dealer actually paid for the vehicle. There are often behind-the-scenes bonuses, such as dealer incentives or a holdback, that give the dealer more profit margin. Looking beyond the dealer invoice price can sometimes save you hundreds of dollars.
Total Price or “Sticker Price” is the total retail price for the vehicle, including the MSRP, options, destination charge, and any market adjustments. Typically a salesperson will try to sell the vehicle for as close to this price as possible, or perhaps offer you a token discount or manufacturer discounts. To get the best price, however, it’s better to negotiate up from the dealer’s true cost, described below, rather than negotiate down from the sticker price.
A Rebate is a direct-to-buyer incentive from the manufacturer. Since it comes from the automaker , disregard it when negotiating with the dealership. You will get the same rebate no matter what price you pay for the vehicle.
Dealer Incentives is money that the manufacturer pays the dealer for selling certain, usually slow-selling, models. This money can be passed on to the buyer in the form of a price reduction, or kept as added dealer profit. This is how a dealer can afford to sell a vehicle for “dealer cost” or below. These programs come and go quickly and aren’t announced to the public. But as mentioned, with the help of cars guide you can learn about dealer incentives on some auto-pricing Web sites.
Holdback is what most manufacturers offer dealers a percentage of the MSRP, or a percentage of the invoice price, as a refund upon sale of the vehicle. The typical holdback is 2 to 3 percent, meaning a dealer can still make a profit on a vehicle sold for "invoice," even without dealer incentives. Holdback information can be hard to find, although it is listed in Consumer Reports’ New Car Price Reports.
The Dealer’s True Cost is the dealer invoice price, minus any incentives and the holdback.
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price the dealership is willing to sell a car for is often well below the sticker price. AnythingAboutCars.com offers buying cars guide to get to this price and thereby save you, the buyer, money.
A few more things to remember in this cars guide: DO NOT include destination charges in your calculation of 5% over dealer cost offer. Add the destination charge after you calculate 5% over the dealer's cost. Don't forget to subtract the consumer rebate if there is one. And as for the options, remember that their price is a big chunk of the total price of a car. The reason why you shop dealers first is to see what typical option configurations are out there. Bring pricing info and check off all the options to study later at home.
When Buying a New Car:
Step #1: First Things First.
Step #2: These Websites Will Give You Unbelievable Saving$$.
Step #3: More Car Buying Guide for Painless Car Buying.
Step #4: A Checklist Before You Finally Go To A Car Dealer.
Step #5: It's Time To Make An Offer That The Dealer Can't Refuse.
Step #6: Before You Buy, Consider This.
Step #7: You're About To Finalize The Deal - A Word Of Caution!