When hunting for the best new Ram Trucks Prices, new Ford Explorer prices, or any new car prices, there are many different strategies for getting a good deal. However, even the best of negotiators can have a hard time if they lack the necessary information to help mark down the price. And one of the essential pieces of info you can have when shopping for a new vehicle is to know the invoice price.
The invoice price of a vehicle is the figure found on the dealer's invoice from the manufacturer. It usually differs from the MSRP, which is the suggested price that a dealership should sell the vehicle to make a profit. The invoice price, while not always an accurate representation of what the dealer has paid the manufacturer for a car, can help you get a better deal.
So where do you find this information and how do you use it? That's why our guide to how to find the invoice price of a new car is here to help.
Before, invoice prices were closely guarded pieces of information since they could give buyers a substantial advantage in negotiating for car prices. In more recent years, the invoice costs have become much easier to get ahold of; sometimes, a dealer may even show the invoice cost to a customer in a strategy to explain the lack of markup on the sales price of a vehicle.
However, it's in your best interest to get ahold of this information before you head to the dealer lot. Thankfully, the world of the internet has made that process much more manageable.
These names are a few of the available resources. By putting in the make, model, and year of the vehicle you want, you can see the invoice price alongside the MSRP and other potential costs like additional dealer charges, which can help you make right budgeting and financing decisions.
While these resources work to be accurate in their numbers, they can sometimes miss out on other costs, such as district advertising charges, mid-year pricing adjustments, and online marketing fees, which will all have an impact on the invoice cost. Because these numbers can change at irregular times, it can skew invoice price listings online.
Something to keep in mind when looking at the invoice cost is that it isn't always accurate to the amount that a dealer actually pays to get a vehicle. Technically, the invoice cost is the dealership's estimate of what the manufacturer will quote them for; in some cases, the amount will add up to more than just the value of the car, including add-ons and other options.
The dealer cost is then the actual cost that the dealership has paid for the vehicle. Since various factors ultimately impact how much this price is, it's also in your best interest to research the dealer cost along with the invoice cost. You can look up these values on the internet as well, and potentially by comparing the prices between dealership.
Another thing that can impact the invoice cost are incentives offered to the dealership by the manufacturer. One of the most common options is dealer cash incentives, where a manufacturer—such as GMC—will pay a dealer for every vehicle sold off the lot. With these incentives, it makes it possible for the dealership to make a profit, even when selling at invoice price.
On average, a dealer cash incentive will generally fall between one and three percent of the invoice price—which can easily equate to a couple of thousands of dollars of profit, depending on the sale price of the vehicle. Some dealer incentives include selling a certain quota of vehicles or matching up with exclusive deals set by the manufacturer.
Another common incentive given by manufacturers is dealer holdback. Let’s look at an example with a Toyota SUV. With this setup, the dealer pays the manufacturer a specific price for the SUV, which is the cost listed as the invoice price. However, once the dealership has successfully sold the car, the manufacturer will pay a certain amount of money back to the dealer.
In this situation, the dealership has effectively paid more than the worth of the SUV and will earn some of its money back later. The advantage to this is that the dealer can then have a higher invoice price to show and sell the car at, but they will still make a decent profit thanks to the holdback amount when it returns—even if they sell below the invoice cost.
Since dealer holdback can lead to additional profits, it can be possible as a buyer to negotiate a deal that's less than the invoice price since the dealership can earn back money later.
Since the invoice price isn't equivalent to the actual dealer cost involved, it's helpful to know how to calculate the real value of the vehicle to prepare yourself to get the best deal. While the formula is simple, you need to obtain the right information to do so. Using some of the sites listed above will allow you to find the numbers to get started.
Naturally, you'll want to start with the invoice price of the make and model of the vehicle you intend to purchase. With some additional research, you can also find the factory holdback percentage and the dealer incentive amount. Generally, the holdback will be a fraction of the MSRP. Once you've multiplied the suggested retail price by the holdback percentage, you're ready to begin.
By taking the invoice price and subtracting the factory holdback value and any dealer incentives, you can get an estimate of the dealer's cost for the vehicle. Depending on the make and model you're considering, this difference can quickly amount to a thousand dollars or even more, which in turn can impact your monthly payment as well.
Either way, you have the chance to negotiate for a better price for your vehicle, so long as you take the time to arm yourself with the necessary knowledge beforehand.