Buying a car can be stressful. There are so many things to learn. The main question that comes to mind is often “What is dealer invoice price and how can I buy a car below it?”. It is important to understand the terminology so you can get the best deal possible on a new car. Get your free car quote today and compare prices from a variety of dealerships in in Virginia.
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What Is Dealer Invoice Price?
Car dealerships are like any other business. They buy cars wholesale and sell at retail. Often retailers make a substantial profit at the consumers expense. The dealer invoice price is what the dealership pays the manufacturer for the car. The sticker price, also known as the MSRP or manufacturer’s suggested retail price, is the amount the automaker believes the vehicle is worth and suggests to the dealership to sell the car.
The dealer does not have any obligation to sell the car for a certain price, despite what is listed as the MSRP. Oftentimes dealers will stack on additional costs in the form of dealer add-ons to increase the sale price. Knowing what the dealer invoice price is can save you a lot of money.
How can you save money? We’ll show you:
- Dealer Holdbacks
A manufacturer often issues a holdback check for the first 90 days and again after every additional 90 days. This holdback helps with interest payments the dealer must make on the loan they took out to purchase the car from the manufacturer. It ensures dealerships can keep up their inventory. The holdback is usually a percentage of the MSRP and, therefore, varies. If the vehicle has not been on the car lot for too long, the dealer may have excess cash at their disposal, which can potentially decrease the cost of your vehicle. - Rebates
Manufacturers offer rebates that can vary from a few hundred dollars to a few thousand dollars. You can get this money up front as cash, or it can easily come off the selling price. But you have to know about it first.
These are simply a way for the manufacturer to entice you to buy their automobile. Basically it is free money to offset the cost of the car. Request a price quote and find see the possible rebates.
How Dealers Can Sell Below Invoice Price
Because of hidden holdbacks and special rebates, the actual cost of the vehicle can be thousands less than the invoice price. If you don’t know about these offers, the dealer will make all of the profit. Most dealers will sell under the invoice price because they are still making money. Consumer deals can amount to as much as $3,000! That’s great information to have when negotiating prices. You’ll then be able to negotiate with the dealer to reduce the price below that of the dealer invoice and drive away in a new car.
Request your FREE no-obligation car quote and be on your way to paying under the dealer invoice price on a new car.