Before purchasing a new car it is important to be aware of the pricing on the vehicle. There are many things to consider and many variables that determine the price and understanding exactly what they are will help you to make a well-informed, wise decision.
When shopping for a new car there are two important figures that you must recognize- The MSRP or the Manufacturer’s Suggested Retail Price and the dealer invoice price. The MSRP is the price that the manufacturer sets for the vehicle and is the recommended price for the dealer to sell the vehicle at. The dealer invoice is normally set lower than this price.
The dealer invoice price is the cost the dealer is invoiced from the manufacturer. The manufacturer bases the cost of the vehicle on a base cost plus added options and accessories. Destination charges also will increase the invoice amount and shipping costs. There are also a number of dealer fees and add ons that can show up on your bill such as the dealer prep fee. Some of these fees are actually car dealer scams and can be avoided.
You may find that many dealers are capable and willing to sell the vehicle at dealer invoice cost or slightly above it. Why? Because there are normally hidden dealer discounts that the dealers receive, such as a hold back allowance which is between 1% to 3% off the invoice price. Because of hidden dealer discounts you do have room to negotiate somewhat of a better price.
Rebates are another factor that not only decrease the price that you pay for the vehicle, they decrease the cost that the dealer pays for the vehicle.
Often times when a dealer receives a car from the manufacturer they will personally upgrade the vehicle with additions such as pin striping, anti-stain treatment, undercarriage rust protection spraying. These costs will typically be passed onto the buyer.
There are a number of ways to find the best price for a car but the most important car tip of all is always to educate yourself on the car, the manufacturer, and the prices before shopping around. You can check out a ton of car buying tips articles here on cartips.com, but if you have any questions or comments be sure to let us know in the comments below.