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Why You Need To Know The Dealer’s Invoice Price To Negotiate The Best Possible Deal On A New Car

February 28, 2014

If you're reading this article then you know the only way to get a great deal on a new car is to do your research before you talk to a dealer.We provide you with the information you need to have the edge during negotiations.

After you request a free, no obligation-to-lease price quote and have received the competitive new car price quotes, along with available internet-only incentives that top certified new car dealerships are offering,use the information in this article to negotiate a great deal on your next new car.

  • A Hassle Free/Haggle Free New Car Buying Experience
  • Find Available Manufacturer New Car Incentives
  • Low Available Monthly New Car Payments
  • Special Limited Time Only/Internet Only New Car Incentives
  • 100% Free, No Obligation New Car Price Quotes

How To Evaluate New Car Dealerships

  1. Here are a few tips for evaluating which new car dealers you want to work with so you maximize your time and have a satisfying car buying experience:

  2. Large Inventory/Selection: new car dealerships that have an extensive selection of new vehicles will make it much easier for you to locate the one that's right for you. They know that if they don't, you will simply go to one of their competitors who offers you what you need.

  3. **Excellent Customer Service & Support:**There is a lot more to buying a new car than signing a sales contract and driving off the lot.You deserve to work with a dealership that really cares that you are satisfied and happy.Top new car dealerships who make (and keep) your happiness and satisfaction as their main objective are the types of dealerships you want to work with.

  4. Competitive Pricing: Every single one of the car dealerships you receive price quotes from know that you will be comparing them; looking for the best deal.A shrewd dealer will ensure their quote is competitive; if they don't you'll simply throw their quote in file 13 and forget about it.

Understanding Factory Rebates, Dealer Incentives & The Dealer Holdback

Over the years you've probably seen hundreds of new car ads offering customer incentives and rebates on new automobiles.What you've never seen advertised on television are all of the incentives and factory-to-dealer rebates they receive from the automakers – and they certainly never advertise their dealer holdback.

If you want to be able to negotiate a deal at or below the dealer invoice, you need to understand the terminology used in the automotive industry and the games they play.The information we've put together in this article will give you the edge during negotiations:

  1. Manufacturer new car rebates are extended directly to the customer who's buying the new car. This is your money as the new car buyer, not the dealerships.

  2. Low APR financing is when the automaker extends financing incentives to help generate more sales by offering new car buyers low (even 0%) interest auto loans. These offers aren't just to help new car buyers, but to also help their dealers sell more cars.

  3. There are additional types of new car incentives/offers you may see advertised that are for specific groups of new car buyers, like a first-time car buyer, college student/recent graduate, the military, repeat customers, etc.These promotions/offers are usually extended regionally, though sometimes you will see a nationwide promotion advertised.

  4. Now, # 1 - 3 above are the incentives that car buyers are offered to buy a new automobile. Let's now turn our attention to all of the factory-to-dealer incentives that are totally different than the incentives offered to you as a new car buyer.

  5. Dealer incentives/rebates are called ‘factory-dealer' incentives/rebates and are basically free bonus money a car dealer receives from the manufacturer for selling certain models.

  6. While the customer/new car buyer incentives and rebates belong to you, in order to get a new car dealership to part with any of their factory-to-dealer rebates you will need to negotiate.These rebates combined with other incentives new car dealerships receive such as; a bonus for reaching certain sales objectives (monthly, quarterly, end of year), selling a high number of a certain models, etc. equates to thousands of dollars in negotiating room.

  7. Next comes the “dealer holdback,” which is a percentage of the MSRP or dealer invoice price that's added to the dealer's invoice by the manufacturer; it is returned to the dealership usually quarterly.

  8. This is why even though the dealer invoice price is technically the price the dealership paid to the automaker for a new car, the dealer's true cost is substantially lower once you consider all of the incentives, rebates and the ‘dealer holdback'.

How To Use Factory-To-Dealer Incentives & The Dealer Holdback To Negotiate A Great Deal

  1. The first thing you should remember is to completely ignore the MSRP (the price on the sticker).Dealerships don't really expect anyone to pay it, though they certainly are happy when someone walks onto the lot who doesn't know any better.

  2. A good place to start your negotiations is around the dealer invoice price (after deducting the dealer holdback).Make your first offer around this price and you'll put the pressure right on the dealer.

  3. Since you're already received multiple price quotes, take the lowest one and email the other dealerships; tell them you're ready to buy – if they'll do better than the lowest price quote you received.When the dealerships start pushing back you'll know you've found the best new car deal.

  4. You could also cut to the chase and play hardball by telling the salespeople that you know what they'll make on the sale.This lets them know you've done your homework and they need to take you seriously.

  5. When you are prepared to decline a dealer's offer make them one last offer and let them know it would be counterproductive to counter.Then let them know they can give you a call if they can do better.Once they realize you're serious, you could be in for a nice surprise and receive a phone call with a much better deal.

Now that you have all the information you need to negotiate for the best possible deal on a new car, the only thing left to do is request your free, no obligation to buy new car price quotes.You'll have multiple new car dealers competing for your business so you drive home with a great deal on a new car.

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