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To Negotiate A Great Deal You Need The Tools To Calculate The Car Dealers Cost

February 18, 2014

There's an old saying 'knowledge is power' that's particularly on-target when it comes to buying a new car. Knowledge is why some people negotiate a great deal on a new car, while others feel like winners if they pay $50 under the MSRP.

The first thing that you, as a new car buyer, need to do is start gathering information. When you request a free, no obligation to buy new car price quote you'll be on your way. With your competing price quotes from multiple new car dealerships you will also receive the MSRP and the dealer invoice price for the cars you select.

You will also receive all of the available manufacturer rebates and incentives being offered in . Print that information off, because once you finish requesting your price quotes you'll want to start calculating the dealers cost.

  • To get a ballpark idea of the dealers cost you will simply take the dealer invoice price and add the destination charges plus the options – then subtract the dealer holdback*.

  • Then take the true dealer cost plus taxes, licensing etc. minus any available rebate for the price you want to negotiate for. With the tools to help calculate the dealer cost you'll get a much better idea of how much profit the dealership is making off of you through a sale.

*Holdback is approximately 2 to 3% of the dealer invoice price or MSRP

How Rebates & Sales Incentives Could Help You Buy Closer To The Car Dealers Cost

Consumer cash-back rebates and incentives are offered by the car manufacturers to encourage new car buyers to buy one of their vehicles and not from the competition. They also may offer specific sales incentives on models that aren't moving quickly or when they want to sell existing models in preparation for the new releases.

These are 3 primary types of incentives that could potentially save you thousands of dollars off a negotiated purchase price:

  1. Consumer cash-back rebates are offered directly by the manufacturer to new car buyers and can help lower the negotiated purchase price of a new car or truck. Manufacturers also offer other cash bonuses/rebates such as a loyalty bonus to an existing customer and even a conquest bonus to customers of their competitors to encourage them to switch sides.

  2. Dealer Cash is incentive money that's paid to a dealer to help with the cost of keeping a large inventory. Remember that the dealer isn't obligated to share the money with you by discounting the price; however, it does give them negotiating room – keep that in mind.

  3. Low/0% APR financing is when a manufacturer offers to finance your new car for as low as zero percent; the low interest offers are extended to buyers with good credit. TIP: Request your credit report to evaluate if you would qualify. If you don't and there are two incentives on the table, take the cash rebate and smile.

Now that you have the tools you need to negotiate in confidence, request a free, no obligation to buy new car price quote to receive competing price quotes from dealerships and let the games begin! You'll be driving home with a great deal before you can say "I love my new car!"

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