When you start shopping for a new car there are a few ways that you can make sure you get a leg up in the negotiation process. One of the most important ways is by understanding the difference between the dealer cost and the dealer invoice price. When you follow some important negotiation guidelines and understand car-buying terminology you will have a better chance of getting a great deal on a new car.
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Negotiation Tips To Follow
Follow these simple tips when negotiating for a new car and you will have a better chance of getting the deal you want.
- Always negotiate up from the dealer cost or the invoice price, not down from the MSRP. This will minimize the dealer’s profits and maximize your chance of getting the best deal possible.
- Do not mention that you will be trading in your vehicle until you have already agreed upon the purchase price, a dealer may not be inclined to shave dollars off the price if they know you are trading in your current model.
- Secure your financing before you head to the dealership. If you already have financing available from your local bank or credit union you will be able to compare what you are being offered there to what the dealership has available, and make the best choice.
- Make sure that you know what you want and what you can afford. It’s important that you pick a vehicle that is affordable, but also offers the features that you want. Also be sure not to agree to any aftermarket features that you don’t want, oftentimes dealerships charge an arm and a leg for extras like rust proofing, which you can easily do with a kit from your local hardware store.
- Do your research, the easiest way to do this is by getting your new car price reports when you request your free no obligation to buy new car price quote. The more information you arm yourself with the better your chance of getting a great deal on your next car.
The Difference Between the Dealer Invoice Price, True Dealer Cost and the MSRP
Dealer Invoice Price: This is the amount that the manufacturer invoices the dealership for a given vehicle. It is the same for a specific vehicle no matter what dealership it is in, for example a 2014 Honda Accord would have the same invoice price whether it sits on a lot in New Mexico or Delaware.
True Dealer Cost: This is the amount a vehicle actually costs a dealership and is not to be confused with the dealer invoice price. There is something worked into the dealer invoice price that serves to lessen the cost of a vehicle to the dealership, this is called a holdback, it is usually 2-3% of the invoice price or the MSRP. The holdback is returned to the dealership at a predetermined date. The existence of the holdback and any other factory to dealer incentives serves to reduce the cost of a vehicle to the dealership, it also means that a dealer could sell a car at or below the dealer invoice price and still make a profit.
MSRP: The Manufacturer’s Suggested Retail Price is the amount that the manufacturer recommends that a vehicle is sold for. It is important to understand that the dealership is under no obligation to sell the vehicle at this price, they can price a vehicle wherever they see fit, whether it’s above or below the MSRP.
When you request your free no obligation to buy new vehicle price quote you will receive our new car price reports including the dealer invoice price and any available rebates/incentives that will give you a leg up when you negotiate for a new car. Its quick, easy and best of all its 100% and your are never under any obligation to buy. Get started today!