Understanding the Dealer's Price Structure
Most people start with the sticker price and negotiate down. This is a losing strategy. To get the best price start the negotiation process from the dealer's cost upward. To do this you need to know the dealer's cost. This page will help you understand the dealer's price structure and how to utilize the dealer's true cost in the negotiation process.
Sticker or manufacturer's suggested retail price --
The sticker price or the total MSRP is the retail price you see on the window of the car. excluding options, destination charge, and other fees. The sticker price includes the MSRP, options, option-package discounts, and the destination charge. The sticker price is only a suggested retail price. The dealer has the option to ask less. And in the case of a really hot moving car may charge more than sticker.
Invoice or dealer's invoice --
The invoice price is the price the dealer pays for the car. However there are exceptions - holdback and dealer incentives. That means the dealer will often pay less than the invoice price.
Holdback --
Manufacturers often offer dealers a percentage discount off the MSRP. A common holdback amount can be as much as 2 to 3 percent. Yes, that means a dealer can still make money if he sells a car to you at invoice! Ultimately, the dealer always tries to win. Keep that in mind when you negotiate. It should inspire you to get a rock bottom price!
Dealer Incentives -- Dealer incentives are given to the dealer for selling certain models, etc. These are unadvertised deals between the dealer and the manufacturer. The dealer is allowed to keep this money. If you are aware of certain incentives you can use it in the negotiation process. The dealer may reduce the car price of the car even further.
Rebate -- The rebate comes directly from the manufacturer or car maker. The rebate is yours, it's not a point of negotiation. Don't let the salesperson act as though the dealership is giving you anything, they aren't. In the negotiation process totally disregard it. Just tell the salesperson the rebate is yours and has no effect on the negotiated price you are willing to pay. Never allow the salesperson to figure the rebate into the price you will pay for the vehicle. You are there to get the lowest price as well as the rebate. The rebate is just icing on the cake after you negotiate a super low price! Rebates are usually highly advertised.
The IFI Discount Buying Club price. The IFI has initiated a program to help you obtain a low no-haggle price. In the Financial Wisdom Seminar we teach you how to save money on all your purchases. Let us help you get wise.
Remember, my job is to help you become financially stable, secure and independent. I will do my best , you do your best.
Your author and friend,
Paul Barrett
