Are you trying to figure out what is the best price that you can negotiate for a brand new car? First of all, to set your offer, you need to know that the auto dealer invoice isn’t actually what the dealer paid for your car!
Many buyers believe they are facing a great opportunity when dealers offer them a new car at or below the dealer invoice. This term might lead to some costly misunderstandings since the true dealer cost is usually much lower than the dealer invoice. Here we will share secrets about what the dealer really paid for your car in order to get a fair offer and get the best price!
The True Dealer Cost Is Not the Auto Dealer Invoice Price!
The auto dealer invoice does not represent the real figure that the dealer paid to the manufacturer. There are some agreements between the factory and the dealer that makes the real dealer cost of the vehicle much lower. Some of the most significant benefits the dealer receives from the manufacturer are known as holdbacks. There is no need for a degree in rocket science to fully understand what the dealer holdback is all about. Keep in mind that there are also rebates and other incentives that may come with each and every successful sale.
What are Holdbacks?
Dealers need to maintain a significant amount of cars in stock and must pay for that inventory when they receive it. What they pay is reflected on the dealer invoice. A few years ago with the introduction of a figure, called the dealer holdback, the auto dealer invoice price became an inaccurate representation of how much the dealer actually paid for the car. The holdback is usually associated with specific advertising and overhead expenses that the dealer incurs over a specific selling period. In truth, the holdback is usually reserved for fleet buyers as an additional markdown to the auto dealer invoice price.
How To Find the True Dealer Cost
Beware of the car dealers that automatically hand you the dealer invoice as this may mean that the dealer is actually making more money from the sale! Keep in mind that the true dealer cost is a closer representation of the right price to pay for a brand new car! The true dealer cost can easily be calculated using the following formula:
True Dealer Cost = auto dealer invoice – dealer holdback + options + destination charge
Now Make Your Own Offer!
Now that you know that the dealer invoice is not the dealer cost, the ‘below the invoice price’ strategy will not work on you anymore. You are now armed with the most accurate pricing information for any type of new car. The auto dealer invoice is all well and good—in fact, if you integrate the auto dealer invoice to come up with the true dealer cost, you can very well approach the car dealer in utmost confidence.
Request a free dealer invoice price quote today to learn specific pricing information about the new car or truck that you are interested in. Remember that saving money is not a matter of chance—it will all depend on how much information is gathered before you sign on the dotted line.