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Understand Factory Invoice, Dealer Invoice and the True Dealer Cost

January 27, 2012

Before buying a car, determine the variables affecting the price. Saving money on a new car will depend how much you know about the factory invoice and the dealer invoice.

New car buying can be hassle free! Request a FREE Car Quote and see accurate dealer invoice, price quotes, and dealership overstock incentives. The best deals !

Factory Invoice vs. Dealer Invoice

There are no differences between the factory invoice and the dealer invoice. Both the factory invoice and the dealer invoice will contain the amount the car dealer paid the manufacturer for a specific model car.

The dealer invoice is less than the MSRP, because it is considered the ‘wholesale’ price of the car. The dealer invoice contains the base price, including other charges such as destination fees, vehicle options, and manufacturer fees. The dealer invoice also contains the dealer holdback (a small percentage of the MSRP used by the dealer to recoup various selling and advertising expenses).

What is the Dealer Holdback?

The dealer holdback is typically equal to 2% to 3% of the MSRP. Sometimes it is a percentage of the dealer invoice. Many buyers do not know, the holdback will be ‘given back’ by the manufacturer after the dealer sells the car. In the end, the dealer will earn 2% to 3% of the MSRP for every sale. Sometimes, its a percentage of invoice. For example, if the car is worth $20,000, then the holdback is around $600. This is the money you will save by simply calculating the true dealer cost.

What are Vehicle Options?

Vehicle options, trim options, are not included in the base price. Vehicle options are additional accessories or features you can add to the car. Examples include an upgraded stereo system, sunroof, larger alloy wheels, body kits, leather seating, etc. New cars are sold in various trims. Higher trim models will contain more standard equipment, hence a higher asking price.

The more options you choose, the more expensive the car. There is a invoice and retail price, for every non-standard option or dealer installed accessory.

Calculate the True Dealer Invoice After Additional Options

If you want to know the REAL dealer invoice price to pay for a new car, you need to determine the true dealer invoice as well as the invoice price for additional vehicle options (i.e. add-ons/upgrades).

Request a FREE Car Quote and you will have access to the base invoice price, and we will help you calculate the true dealer invoice for any additional options on the car.

All cars come in different trims. Each trim will have standard equipment installed by the factory. Car dealers make a profit by marking up the price of additional standard equipment by as much as 60%.

Check the window sticker of the car. This shows the standard equipment that comes with each model trim, along with additional equipment installed by the dealer. Remember, each vehicle option comes in the form of a code. The codes are listed on the sticker price. This is the MSRP of the option installed.

However, there is also an invoice price for the vehicle add-ons. Some cars come with pre-installed options from the factory. The dealer will then further equip the car with additional accessories, which are more expensive than the actual cost.

Check the window sticker and make sure you only get the add-ons you need. The car dealer may be willing to re-negotiate the price of these vehicle add-ons, whether standard or not. They may not give you the actual invoice price of the add-ons, but they may be willing to give you a discount. Floor mats, moldings, license plate brackets, and mud guards not only serve an aesthetic purpose, but they enhance the overall driving experience altogether.

New car buying is easy and fun! Request a FREE Car quote and find all the latest deals ! You will find the dealer invoice on the car you want to help save you significant time and money! Quick, FREE, and no obligation to buy!

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