New Car Price Guide: How To Get The Best Deal

November 25, 2013

Getting the best new car price requires researching the MSRP, hidden dealer discounts, deal add-ons, and the best online and offline pricing resources.

Dealer Lot of New Cars

When looking for a new car price, accurate information will help you save a lot of time and money. Guides provide a wealth of pricing information that can help you quickly determine if a price offered to you is fair or not.

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Check the Sticker
For the price of a specific new car, the most accurate breakdown of a car's price is the Monroney sticker, named after the senator who first introduced the information act which mandates its requirement to be shown on every vehicle. Each car model has a standard list of equipment included for that model. The sticker shows the standard features plus the options installed on the vehicle, reflecting the total price for that vehicle. This listing defines all the manufacturer's suggested prices for that particular vehicle as configured.

Find Average Pricing Information
For a general view of the make and model you want, visit the Kelley Blue Book website to find pricing information. The Kelley Blue Book website offers all sorts of pricing information on almost every type of car and truck imaginable.

You can search for vehicles by body style or make and model and find the Manufacturer's Suggested Retail Price, or MSRP of the vehicle you're interested in. The website also supplies the dealer invoice price for any of the cars and trucks listed on the site. This is the price actually paid by the dealership to the manufacturer for the new car or truck. All of this pricing information can help you determine if you're getting a good deal or not.

Use CarsDirect
CarsDirect offers guaranteed low pricing on almost any type of new vehicle. Searching for new car pricing on the Internet has never been easier and more convenient. This website can help you determine what type of vehicle you can afford and best suits your lifestyle needs.

Try Other Websites
There are other websites that offer pricing information. Truecar.com is one of the most comprehensive sites to find information about what prices are reasonable as well as what others might have paid for the car that you are ultimately considering buying. Compare dealerships as well as comparable vehicles and be confident that you are making the right decision.

A surprisingly good resource for car pricing is at the National Automobile Dealers Association at nada.com. There are not only reviews of cars on the market for sale; there are also side-by-side comparisons as well. It is beneficial to compare information directly from the dealers with what is being stated by the consumers and reviewers.

Look in the Paper
Most new car dealerships in your area advertise specials for certain models of vehicles. There are times when the prices in your local newspaper will be very low and tempting; however, you should be aware these prices are generally considered loss leaders and there may only be one or two units of that particular type of vehicle available.

If you want to take advantage of very low prices advertised in your local newspaper, make sure you visit the dealership as soon as possible. Heavily discounted specials usually won't last long, so make sure you're the first one there in order to enjoy the most savings.

Compare Prices Online vs. On-the-Lot
While online car dealers can offer some very attractive pricing options, you should be aware that online car dealers and new car dealerships in your local area pay the exact same dealer invoice price for vehicles that they sell. If you're more comfortable buying the car from a local new car dealership, you should first get pricing information off the Internet and then visit the dealer and see if the dealership is willing to match the price. Many times, local new car dealerships will match pricing on identically equipped new cars and trucks.

Key Facts about New Car Prices

There are many factors and variables in how new car prices are determined, and understanding as much about the process as possible will help you make a better deal on your next new car or truck purchase. New car dealerships are, of course, in business to earn a profit; however, you never need to let them earn too much profit off of your purchase.

The Basics of New Car Prices
There are usually two important figures to remember when considering new car prices, the Manufacturer's Suggested Retail Price, or MSRP, and the dealer invoice price. The MSRP is set by the manufacturer as the recommended selling price for a new car or truck; while this is the price suggested by the manufacturer, many dealers will normally sell the car for much less than the stated MSRP.

The dealer invoice price is the amount actually paid by the dealership to the manufacturer for a particular new car or truck. The dealer invoice price is the same for all dealerships across the country and is set by the manufacturer based on the base cost of the vehicle plus any added accessories and options. Other costs that increase the invoice amount paid by the dealer are destination charges, or shipping costs, as well as dealer prep costs and dealer add-on services and accessories.

Hidden Dealer Discounts
While the invoice price of a vehicle generally reflects how much the dealer pays to the manufacturer for a new car or truck, it is never the actual in the price that the dealership winds up paying. Most manufacturers provide an incentive in the form of a holdback allowance for every new car truck sold. The holdback amount for most new vehicles ranges between 1 and 3 percent depending upon the manufacturer. Therefore, most dealerships can sell a vehicle at invoice price and still earn a small profit on the sale.

Furthermore, dealer costs are reduced with any rebates being run for a particular make and model by a manufacturer. Just as a rebate decreases your cost for the vehicle, the rebate also reduces the cost that the dealer is required to pay to the manufacturer.

Dealer Add-ons
Once the dealership receives a new car truck from the manufacturer, the dealership will often perform other services on the vehicle, such as anti-stain treatment, pin striping and undercarriage rust protection spraying. These services all increase the amount that the vehicle costs the dealership; therefore, these costs are generally passed along to the consumer.

Furthermore, some dealerships will attempt to add a market adjusted retail value increase to the cost of the vehicle. Depending on the location of the dealership and the make and model vehicle you are purchasing, the dealership may attempt to earn a higher profit for vehicles that are in high demand and easily sold at a higher price.

Related Questions and Answers

How Does Kelley Blue Book Pricing Compare with MSRPs?

For a number of years, people have relied on Kelley Blue Book pricing to know what they should pay when looking for a car. Typically, Kelley Blue Book pricing is an average of all the prices for a given car, with the same options packages installed, taken from dealer sales in the same area. Manufacturer's Suggested Retail Price is the price that the factory recommends the car to be sold at in order for the dealership to make a fair profit. Most dealers will sell the car at a lower price than the Suggested Retail Price in order to make the customer feel they're getting a better deal.

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