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The internet has changed the way people negotiate to buy a car. Vehicle's invoice prices are no longer a mystery. There are dozens of sites which profess to give you the "invoice." According to a Reuters' article many of the websites overstate invoice price. Who to believe? The National Association of Automoible Dealers (NADA) operates a web site which we think is your best chance to obtain the actual invoice prices. Remember, the invoice is not actually what the dealer pays for the vehicle. There is a dealer "holdback." This is typically 1% to 3% of invoice price. Edmunds.com does provide helpful information about the holdback. Please do not forget to check to see if the manufacturer is offering a rebate or other incentive. These can be substantial. The dealer may not necessarily mention this. Be armed with the information. Lastly, the most difficult question is determining what price the dealer will sell the vehicle. Some cars sell below the invoice, some over the invoice and some over MSRP. We provide the following list of our input into where we think certain cars sell. Keep in mind fully loaded vehicles actually will sell for more than stripped models. This does not make sense since the dealers make more on fully loaded vehicles. We guess the rationale is fully loaded vehicles typically sell better even though they are more expensive. LINKS Incentives, Rebates and Holdbacks (Edmunds.com)
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Remember, when you price your car you must compute the price for each option or option package. This is important. Many vehicles are equiped almost an infinite number of ways. For some makes, you may not find the vehicle on a lot exactly as you want. You need to price each option (or option package.) Be ready to do some quick arithimetic if you are at the dealer, ready to buy, and under pressure. Take the time to do this, however, to make sure you are negotiating in your price targets. If the manufacturer of the car you want bundles options in packages pay careful attention. Prior to the negotiation session, research the option packages available. When option packages are utilized, you will probably find a vehicle equiped as you want. But, look carefully at the packages to make sure the option package really has what you need. Be very cautious of "dealer" options such as sound proofing and corrosion protection. Be ready ahead of time for these types of charges (read our interview with a car salesperson). LINKS |
We are stating the obvious when we remind you to include tax and license. However, at today's vehicle prices, tax in many states will cause its own "sticker shock." Figure all of these amounts ahead of time. Tax will probably equal your state income tax. Just multiply it. Find out from your dealer ahead of time, or call DMV, to learn the tax amount. There should not be any additional charges of any significance. Financing, however, complicates your purchase. Keep it simple. Determine the actual price of the vehicle first. Apply any available rebates. Then, determine (and negotiate if possible) the interest rate. If you have a trade-in, now is the time to mention it. Negotiate the price of the trade-in. This is an important step because if you do not get a fair price (very close to what you could sell on your own) all of the work you have done to negotiate the price of the car. If you are leasing, make sure you have arrived at the selling price first. Then, negotiate with dealer for the monthly payments. Pay careful, and we mean careful, attention to the conditions of the lease, such as maximum annual mileage, clean-up charges and maintenance. |
