Buying a new car below the dealer invoice price isn’t hard when you know about the true dealer cost, along with the best times during the year to negotiate with new car dealerships. Take a minute to read about common scams that unscrupulous car salespeople might try to pull, so you walk away a winner and not a victim.
When you request a free, no-obligation-to-buy new car price quote you’ll receive the true dealer cost on new cars , along with available rebates and incentives to get the best possible deal on a new car. When you’re holding all the cards, you’ll turn the tables on car dealerships
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What Is The True Dealer Cost For A New Car & How Does It Compare To The Factory Invoice Price?
To get the best deal on a new car you need to be able to navigate through the smoke and mirror tactics new car dealers employ. One way new car buyers become confused is with factory invoice price, as they’re told that its the ‘real’ cost a new car dealership paid to the automaker.
The factory invoice will list the base price of a car, along with factory installed options. It also includes charges to have the car transported to the dealership (destination charges), along with a dealer holdback and overhead assistance.
While the destination charges must be paid by the dealership to the manufacturer and are consequently a non-negotiable charge. The assistance from the manufacturer in the form of a holdback is returned to the dealership. This is usually around two to three percent of either the factory invoice price or the manufacturer’s suggested retail price (MSRP).
Cutting to the chase, what this means is that the true dealer cost is much, much lower than the factory invoice price andsubstantially lower than the MSRP.
How Is It Possible For A Dealership To Sell Below the Dealer Invoice On Cars?
The answer is, with help from the manufacturer and here’s how the game is played. How many times have you driven by a car lot and seen the same cars sitting there for a long time? Probably a lot, and the fact is automakers get worried when their dealers aren’t making sales quickly. Dealerships can’t buy new cars if they have a lot of existing inventory that’s not moving.
- To attract new car buyers like you, the automaker will offer rebates, zero or low interest financing, lease specials and employee discounts to folks working at the dealership. Sometimes they’ll even let the employees offer discounts to their friends and family.
- And those are just the incentives they’ll talk about; then there are the hidden kickbacks and incentives that no one wants to talk about. The dealer holdback, regional and monthly promotions where both the dealership and individual salespeople get fat bonuses for reaching sales goals etc., adding up to a ton of money.
- Are you starting to see how it’s possible for a dealership to sell below the dealer invoice on cars? Not only can they, but they can do it and still make a lot of money in profits! So when a car salesperson tries to tell you they’ll make the ‘big sacrifice’ and sell you a new car at invoice price or even a whole $100 below it, just laugh in their face – tell them they’ll have to do a lot better if they want to make the sale.
- When you’ve received your new car price quote with the true dealer cost on the car you want to buy, you’ll have a big ace up your sleeve to slap down on the table and negotiate the best price.
Tis The Season To Save & Buy Lower Than the Dealer Invoice Price on Cars
Okay, now you know about all of the secret ways a car dealership generates money from each new car they sell, so let’s take it a step further and talk about when they’re most vulnerable.
- July through October: Remember when we discussed all of the cars sitting on the dealer’s lot? Well, they have to get sold to make room for the manufacturers new models. Dealerships are under a tremendous amount of pressure to sell and this is an excellent time to hit them where it hurts; in their pocketbook, by encouraging them to part with a lot of those profits to make the sale. Between taking a piece of their pie and factoring in the incentives the manufacturer is offering you (cash back, low APR, etc.) you’ll drive away grinning from ear to ear.
- December: If you really want to save money on a new car get your Christmas shopping done in November, so you can hit a new car lot instead of the mall when December rolls around. New car showrooms are deserted except for a lot of panicked car salespeople and you’ll be greeted like a head of state when you walk in. These folks need to make a sale and the customers are sparse, so they’ll do almost anything to make you happy. Don’t forget those end-of-year bonuses they’re trying to get – tis the season to save big bucks on a new car.
Don’t Fall For These 7 Common Dealer Tricks
- Know your credit score and your rights! Unscrupulous salespeople may infer your credit score isn’t good, and con you into paying higher APR rates. They may even tell you shortly after you arrive that with money laundering regulations they need to run your credit report. This is a ploy to find out how much you can afford to spend and will take away your leverage during negotiations. Beat them at their own game by knowing your credit score ahead of time and consider getting pre-approval from your bank before you head to the dealership.
- Don’t let anyone con you into depositing money into an escrow account they’ve established. For your own protection, insist that you are the one who sets it up. That way if something happens and the car you agreed to buy was misrepresented, you have control of your money.
- You see this new car ad and the car of your dreams is being offered at such a low price, you rush down to the dealership to make a deal; only to get there and be told the car was just sold. Then the salesperson shows you another car that’s priced a lot higher than the car in the ad. Turn around and walk out the door. Bait and Switch is the oldest con in the book.
- Don’t show your hand as to how much you can afford to spend on a new car; you’ll shoot yourself in the foot during negotiations. Additionally, keep your eye on the ball and look at the long term costs of the new car, not those super low monthly payments the salesperson keeps talking about.
- If you currently have a leased car and the salesperson encourages you to trade it in before your lease has expired, be aware that you most likely will incur high pre-termination penalties that will be rolled into the monthly payment of your new car.
- We can’t stress enough to take your time and thoroughly read your sales documents before you sign. There are many unethical salespeople who will try to slide in extra fees like detailing, security systems and other add-ons that you don’t want and didn’t agree to. Before you sign and drive away ensure that you’re only paying for what you agreed to and that the transaction is final. You’ll eliminate the risk of driving your new car home and getting a call the next day that your credit app was turned down (another ploy to get you into a higher interest loan).
- Always keep in mind that nothing in life is free; not that extended warranty or anything else the car salesperson adds to sweeten the deal. They’ll just be added into your monthly car payments. Aftermarket accessories such as an extended warranty, additional insurance protection etc., can be purchased at any time and you may find a better deal through another company. If not, you can always add it later through the dealership.
So now you know how and when you can buy a new car below dealer invoice. The only thing left to do is start researching new car prices and available offers by requesting your free, no obligation new car price quote.
Hold the winning hand when you negotiate for the deal of a lifetime on a new car.