Everybody knows that, when pricing a new car, the price on the sticker (MSRP) is never the real price of the car. But did you know that the price the dealer is quoting as the “invoice price” isn’t really the price he paid for the car?
The single most common misconception when buying a new car is that invoice means invoice. Not so. Invoice price is what the dealer paid, plus the fees added (documentation fee is the only really legit fee) plus the amount of money the dealer is getting back from the manufacturer after the sale (called “holdback,” it is a percentage of the MSRP reserved as profit for the dealer).
So when the dealer is offering you “invoice,” he really isn’t. If he wanted to give you the car for what he actually paid for it, then he would charge you Dealer Cost. That is the straight up amount he is into the car for…what he needs to sell it for just to break even.
How do you find these numbers? Most of the online purchasing websites have some of them. TrueCar.com has all of them as well as a handy price curve that shows what the average price of the car you are looking at is selling for, regionally, nationally or locally. By simply selecting the car you are interested in, you will see MSRP, Invoice, Dealer Cost and Average Sale Price.
Once you have identified what is a fair price, most of these websites will offer a way to connect with a dealer and you can work with them to find the right car.
Things to be aware of:
· Make sure the price offered isn’t for a specific car they have in stock (and if it is, make sure it has the options you want).
· Make an appointment with the Internet Department. Most Internet Sales teams aren’t on traditional commission, so the pressure to make a sale isn’t as great.
· Make sure you see the car and it is what you want.
Using the Internet is a convenient way to get a fair price and avoid a car buying nightmare.