What's a good price to at least target for when buying a car?

Question

- Is the invoice price (found at kelley blue book) the actual price the car dealers are paying for their cars?
- If yes, I heard 5% above that price is a good "basement" target to shoot for since 5% is the min. the car dealer and the salesperson would like to make?
- This invoice price included tax already?
- Or is there a better way to figure out how much a car is suppose to be?

Thanks!

Answer 1

I like to start at about 5% BELOW the invoice price. Fact is that that price is just more smoke and mirrors in the industry. All US makes and most foreign makes also have a "holdback" that is rebated by the factory, usually once a quarter. The holdback is typically 3% of the base MSRP of each car sold.

And factories often have unpublished factory-to-dealer incentives that further reduce the dealer's cost for the car. You hear about the published ones, but rarely hear about the unpublished ones. It's all additional profit for the dealer.

It's for these reasons that dealers can often sell a car below factory invoice and STILL turn a profit on it. And when they're coming up to the end of the month, quarter, or year they are pushing to make their quotas and sales targets that will influence future factory allocations of vehicles, especially the hot sellers. They'll often forgo a bit of profit at the end of the quarter or year to get the number of units out the door figuring (correctly) that they'll make it up later.

Here's a dirty little trick that works brilliantly. It leverages a saying in the industry, "What the sales manager giveth, the finance manager taketh back." Basically what that means is that if you grind them down on price, spend a LOT of their time getting the deal signed, the finance manager will take all your hard work back when he draws up the finance contract. You spend several days negotiating a great price only to have the finance manager add an extra 1 or 2 points on the interest to the loan rate and they make up their losses and then some. So, how do you beat them at their own game?? Easy!

Check with your bank or credit union in advance and get pre-approved for a loan at the best possible rate. Do your homework so you know what you'll pay for the car and learn what the payments will be from the bank. (This also works great if you're the rare one who can pay cash. Follow along, you're going to let them THINK you're a credit buyer.)

Then go to the dealer and grind away for a great price. But while you're doing that, let it slip out how much you're willing to pay in monthly payments -- but add a good chunk to what you already know the payments are going to be! This is a great one for couples to work; just let the salesman "accidentally" overhear that number while you "argue" about the deal. (Trust me, the finance manager WILL know that number!)

They let you get away with your great cash price and make it up on the loan. Just glance over the paperwork and maybe admire that they even got your payments to fit your budget. Then sign on the dotted line and take delivery.

Now, here's the fun part. Drive your shiny new car straight to the bank and refinance that hideously expensive dealer loan! Set it up so that when the first payment is due, your bank pays them off directly, in full.

You just got YOUR price, quite possibly below invoice, and the best possible internest rate! THAT'S the way to buy a car!!

Answer 2

When buying a new car the dealer often pays less than the listed MSRP. OEM's offer discounts to the dealers to move stock for end of year or slow moving models. Often Automotive News, a auto industry rag, has the OEM incentives listed. You can start with an offer at MSRP but you won't get it with popular models or new models. (Toyota FJ, Mazda Cx7, Nissan Murano etc) A 5% offer above MSRP is a good start on models that sell well.

Answer 3

Check around on the internet you would be so surprised by different states what the base price starts at. No the tax is not included. And shop. You have them in your hands!! They want to sell you a car because they only get paid if they do. Talk to a high volume car salesman. Because usually they can knock down prices and offer you more for free. i wish you the best in buying your car

Answer 4

The information you already have is very good.

The only info I can add is- Go to a dealership that has a big car service center. The dealers may be willing to go lower on the price because they know that they can make up the difference in the service center.

Answer 5

The Dead Cost is the price to get closest to. The Dead Cost includes all incentives received by the dealer in reference to the car.

Invoice and Blue Book do not include this.

Answer 6

MSRP: manufactures suggested price...is the price to pay...

shoot for edmunds.com..go buy what they say

Answer 7

it all depends if the car is used or not, and the make of the car.

Answer 8

The best place to start is, of course, your budget.

Answer 9

Try these: