New Car Invoice Price, Dealer Cost w/ Holdback MSRP
New Car Prices:
Compare MSRP vs Invoice Price vs True Dealer Cost w/Holdback
- Dealer Cost Calculator – True dealer cost is a must know when buying new cars. This will calculate dealer cost of any new car.
- How to Buy New Cars Below Dealer Invoice Prices – Save Thousands on your next new car.
- New Car Dealer Cost- A complete explanation of what it is and why you need to know the true dealer cost.
Must Know New Car Price Terms:
MSRP refers to manufacturer’s suggested retail price. It is the published amount that a car manufacturer advises dealers to charge. Of course, the MSRP is merely the starting point in negotiations at the dealership. In fact, many people disregard MSRP altogether while negotiating.
Dealer Invoice Price – The invoice price of a new vehicle is the price on an invoice the manufacturer sends a dealer when they acquire a vehicle. many people believe that this is the true dealer cost of the vehicle, but in many cases – it is not, Invoice prices have hidden profit built into them such as dealer holdback and manufacturer to dealer incentives. (See below.)
Dealer Holdback – Dealer holdback reflects a percentage of the MSRP or invoice price that is paid back to a dealer by the manufacturer. Manufacturers usually pay this withheld amount back quarterly, but practices do vary. Holdbacks came into widespread use a few years ago. They are used to improve dealer profits by inflating invoice prices. They primarily do that by reducing the gross profit of a sale. In turn, the salesperson who was involved in the transaction earns a lower commission.
Dealer Incentives – Dealer incentives are often referred to as factory-to-dealer incentives. They reduce the dealer’s true cost to buy a vehicle. In some instances, those savings may be passed along to consumers. Dealer incentives are often offered on a regional basis in order to bolster sales for a specific model. Other times, they are used to reward dealers who reach a certain sales target.
Destination Fees – To arrive on dealer lots, new cars have to be transported from automobile manufacturing plants. The expense of doing so is charged to the dealer by the manufacturer, who then passes it along to the consumer. The total amount is usually several hundreds of dollars. As nice as it would be to somehow negotiate away these fees, it simply isn’t possible. The amount differs depending on the model and the manufacturer, but it has nothing to do with how far the vehicle had to be transported.
Manufacturer Incentives and Rebates – Three of the most popular manufacturer rebates and incentives are designed to be passed along to consumers. Low-interest financing, cash rebates and special leases are all offered from time to time to stimulate sales. Sometimes, they are offered as first-time buyer specials, employee discounts, military discounts and other incentives.
True Dealer Cost:
The Dealer Costs Formula:
Invoice Price – Holdback – Rebates Incentives (If any)= Dealer Cost
Take the Invoice price and subtract the holdback. (Percentages Below). Take this amount and subtract any manufacturer rebates. To get the rebates simply fill in a price quote from one of the recommended services listed – you will receive the rebate you are entitled to in your area. (If Any)
- If a % of “Total” MSRP or Invoice make sure you add all the manufacturers options to the price when calculating holdback
- If a % of “Base” MSRP or Invoice, calculate hold back on the Base price before you add the options
See New Car Dealer Cost and Holdback for more information.
Note: The price guides above do not include state taxes, license fees, or manufacturers Rebates. To calculate your on the road price, add you state taxes and License fee – then subtract your manufacturer rebate if any.
A note about rebates: Most rebates are subtracted from the “on the road” figure. In most cases, you can have the rebate if you are arranging your own financing or you are paying cash. If you decide to use the manufacturer’s low interest financing, you do not usually get the rebate. Ask your dealer for details.