Invoice Price For Cars

The invoice price for cars is the amount of money paid by the dealership to the automaker for the cars from the factory. Obviously, the invoice price is less than the MSRP – Manufacturer Suggested Retail Price – a.k.a. the sticker price. However, this invoice price is in most of the cases higher than the amount the car dealer actually pays to the automaker, because the latter offers extra discounts to the dealer. Some of the most important popular discounts are “dealer cash” and “dealer holdback” along with others that depend on the number of cars sold. The invoice price does not include tax, license/registration, title fees, nor does it include any manufacturer-to-consumer rebates.

The question that many of you might have asked yourselves is: can I buy a car for less than its invoice price? The answer is yes, sometimes. Due to the aforementioned discounts that automakers give to the dealers, the latter can sometimes sell a car at the invoice price (or even less) and still make a nice profit. Even in the situation in which the car dealer doesn’t get any profit from selling the car, he will get more money from the adjacent parts of the deal – like extended warranties or financing. There are also many situations in which the dealers sell the cars at a lower invoice price to get rid of them.

Here are a couple of other terms that you should know regarding the price tag of a car. First of all, we have the dealer invoice which is a document that shows the actual cost of a new vehicle and its various options. In many cases, the cost is lower than the MSRP. Technically speaking, the invoice’s purpose is to reflect how much money the dealer has to pay to the automaker but there are other factors that must be taken into consideration when figuring out the actual dealer cost and in many cases the number is lower than the one on the invoice itself.

The holdback is the amount of money that is deducted from a vehicle’s invoice price by the automaker, thus reducing the actual invoice cost. In many cases it is a percentage of the total invoice or a flat amount. Most of the car dealerships will not permit negotiations regarding the holdback amount.

We’re certain that you’ve heard about incentives before, these are given by the automaker to the dealer on certain models. In comparison to the rebates, these incentives are given directly to the car dealer, not to the customer. These incentives reduce a vehicle’s invoice cost to the dealer, who will have to decide if they keep the same price tag in order to make a bigger profit or offer a discount to the customers.

Additional markup can be a little bit annoying. There are many dealers out there that will ask you to pay for a “documentation fee” even though you agreed to pay the invoice price. These fees can cost you even a couple of hundreds of dollars more.

In order to get a much more accurate image regarding the invoice price for cars, you’ll need to do some research before heading out to the dealership. It would be recommended to visit websites like Edmunds or Kelley Blue Book which will give you the necessary invoice price for cars and options.

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Post tags: Tags: additional markup, holdback, incentives, invoice price