Getting a great deal on a new car isn’t hard if you have the information you need for your negotiations and know the ideal time to turn the tables on new car dealers.
When you request a free, no obligation to buy new car price quote, our database will search for all available special incentives and cash rebates being offered . Combined with the valuable information you’ll learn in this article, new car salespeople won’t stand a chance of cheating you during negotiations.
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Invoice Prices vs the MSRP
When you’re shopping for a new car there are a couple of different price points that will come up: The MSRP (Manufacturer’s Suggested Retail Price) and factory (or dealer) invoice price. In order to know you’re paying a fair price for your new car it’s important that you know the difference between them and the role each plays.
While the MSRP is just what it says, the manufacturer’s ‘suggested’ retail price, the factory invoice price (also called the dealer invoice) is what the car dealership pays to the manufacturer for a new car. Technically though, the invoice price isn’t accurate; while yes the dealer pays that amount, once the car is sold they are eligible for discounts and other incentives that reduce the invoice price.
With your free, no obligation to buy new car price quote you will receive the invoice price on the new car models you’re interested in.
Is It Possible For A Car Dealer To Sell Below Invoice Prices?
Yes it is, with a lot of help from the automaker. Here’s how it works. Dealerships oftentimes have a large amount of cars that sit around unsold due to slow sales. This makes manufacturers very nervous; if their dealers aren’t selling existing inventory they won’t be able to buy more cars from them. So to counter this big negative, the manufacturer offers new car buyers incentives such as cash back rebates, zero percent APR financing, special lease prices and even discounted employee prices.
Then there are all of the special and hidden incentives they provide to the car dealer that aren’t seen by new car buyers. Hidden dealer rebates, monthly promotions where dealerships receive bonuses, regional promotions – adding up to a lot of money than can allow them flexibility when negotiating with a new car buyer.
When you combine all of these customer and dealer incentives, as well as other price discounts, a new car dealer can sell a car below the invoice price and still generate profits. These incentive programs normally are time sensitive and either expire outright or are replaced by a new promotion.
This is why with your free price quote, you’ll also receive the most current available rebates and incentives that are being offered.
The One Thing You Must Know To Get The Best Deal On A New Car
While you might actually find a car salesperson that’s upfront about their special promotions, one thing none of them want to discuss is the one thing you absolutely must know, in order to have the advantage during negotiations.
And it’s one little word: Holdback. Remember reading about how the dealer invoice price isn’t technically the price the dealership paid for a new car? There is one constant that plays a part in reducing the dealer’s actual payout on new cars – the dealer holdback and here’s how it works:
- Added to the dealer invoice price is around 2 to 3 percent of either the factory invoice price or MSRP. This can run from several hundred dollars to thousands of dollars that the manufacturer kicks back to the dealership once they sell the car.
- A car dealer has to finance their inventory through their local bank and holdbacks help negate additional interest they incur on cars that sit on their lot for a while. With the inflated price shown on the invoice, they get a higher credit line.
- The dealer holdback plays a part on the front end of a transaction because it affects the sticker price; as well as affects the back-end of the transaction when you go to buy the new car. You’re not supposed to know these holdbacks even exist and it allows the car dealer to generate even more profits on the sale.
- The dealer holdback puts the invoice price in a much clearer light and gives new car buyers a better idea of the true dealer cost for the new car they want to buy. Many new car buyers feel that if they buy a car at or close to the dealer invoice price they’ve scored big and just negotiated the deal of a lifetime. What some lose sight of is the fact that just the same as any other business, car dealerships wouldn’t be around too long if they gave everything away and didn’t make a profit.
Great Times To Buy A Car Below Invoice Prices
In addition to being aware of the hidden factory-to-dealership incentives and the dealer holdback, there are certain times during the year when you’ll be in an even better position to negotiate a great deal on a new car.
- July through October: These are prime months to negotiate a good deal, because car dealerships need to make room for next year’s new car models. This puts a lot of pressure on them to move their inventory and can benefit new car buyers in the form of lower sales prices. Combine that with your knowledge of customer rebates and hidden dealer incentives (along with the holdback) means you’re in the advantageous position of understanding what the dealer is actually paying for the car which will help you negotiate a great price on a new car.
- December: Think about what you’re always doing during the month of December (and it’s not buying a new car). Well, most other people aren’t shopping for new cars either; they’re racing around just like you, trying to get everyone their Christmas presents. Imagine being a new car salesperson with absolutely no customers, and no customers means they won’t reach sales goals; if they don’t reach their sales goals, they can kiss their bonus goodbye. So December is a great tie o find amazingly low new car deals.
When you commence initial negotiations with new car salespeople during these timeframes, you will have a big advantage in encouraging them to cut to the chase and accept your fair price offer. Can you say win/win?
The only thing left for you to do now is start doing your homework and request a free, no obligation to buy new car price quote. When you receive the dealer invoice price, along with available rebates and incentives from new car dealerships, organize the information in an easy-to-reference list and start your negotiations.
You’ll have everything you need to start negotiations to buy at the time that will benefit you the most.