When you are shopping for a new car there are a few easy ways that you can stay ahead of the game. Once such way is by understanding important car shopping terminology and using your understanding to know when you are getting a deal on a new car. By understanding the new car MSPR, dealer cost and dealer invoice price you will be able to step into the dealership and negotiate like a pro.
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New Car MSRP vs. Dealer Invoice Price vs. Dealer Cost
There are a few important definitions you need to be aware of when shopping for a new car, your understanding of them could enable you to drive off with a great deal!
New Car MSRP: This refers to the Manufacturer’s Suggested Retail Price, it is the price that the manufacturer recommends that the dealership sell a given vehicle for. It’s important to remember that the dealership is under no obligation to list the vehicle at this price, they can charge whatever they want, whether its higher or lower than the new car MSRP.
Dealer Invoice Price: The dealer invoice price is the amount that the manufacturer invoices the dealership for a given vehicle. This price is the same for a specific vehicle no matter where the dealership is, for example a 2014 Mazda CX-9 will have the same dealer invoice price listed at a dealership in Baltimore as it does at a dealership in Houston. This is slightly different from the factory invoice price, which also includes any manufacturer and destination fees that may be applicable, as such the factory invoice price may vary slightly from dealership to dealership.
Dealer Cost: This may be one of the most important terms you need to know. The dealer cost refers to the amount that a dealership spent on a given vehicle, when you know what this is you can calculate how much profit the dealership will be making from your offer. This is not the same as the dealer invoice price, that’s because there is a ‘holdback’ built into the invoice price. The Holdback is a value, which is 2-3% of the new car MSRP or invoice price and is returned to the dealership at a predetermined date. It serves to reduce the actual cost of a vehicle to the dealership, as well as help with any associated costs of keeping the vehicle on the lot or showroom floor. Because of the existence of the dealer cost, you can actually pay below the invoice price and the dealership can still make a profit. So if the dealer is trying to act like they are making a loss by selling you a vehicle at or below the dealer invoice price, keep in mind that this is not always the case. You can get a rough estimation for the dealer cost by subtracting the holdback and any other manufacturer to dealer incentives that the factory may be offering, from the dealer invoice price.
Why Wait? Get started today! When you request your free no obligation to buy new car price quote you can get offers from dealerships in your area delivered straight to your work or living room computer. When you get quotes from multiple dealerships you can leverage them against each other and make dealerships compete for your business, having multiple new car price quotes also gives you more options so you don’t have to put all your eggs in one basket. Getting a great deal on a new car has never been this easy!