How to Compare Car Quotes

March 1, 2012

Learn the difference between a car quote and an invoice, whether taxes and fees are incorporated, and how to compare car quotes.

Comparing car quotes can help you make sure you save the most money possible on your new or used car purchase. You probably know that you should never pay MSRP for a vehicle. You need to know how to take additional charges into account when you research car prices. Following these steps may help you compare car quotes to find the best deal you can.

Check Kelley Blue Book
The Kelley Blue Book is a great source to find the fair market value of cars both new and used. You can use KBB to find a standard base for sticker prices on the car or cars you are considering. Ideally, the quotes you get from sellers should be at or below the KBB number.

Ask about Additional Charges
Most car dealers don't include extras like destination charges in their price quotes, but some do. Some dealers also neglect to add the price of optional features which are already on the car, meaning you may be surprised when you walk in and find yourself confronted with a price much higher than you expected. Ask each seller exactly what is included in the price quoted, and see if you can get them to tell you the total cost of the vehicle you would be purchasing, everything included.

Comparison Shop
Once you've found out which price quotes are the lowest once all the additional costs are taken into account, you can send that price to the other sellers and ask them to beat it. If they will, go back to the original lowest priced seller and ask them to beat the new price. Go back and forth to find the best deal you can.

By making sure the quoted prices are fair and knowing precisely what they encompass, you can more accurately comparison shop to find the best deal on a new or used car.

Do Dealers Include Taxes and Fees into Car Quotes?

Car fees or sales tax which one car dealer includes in their quote and another dealer does not can be confusing and cause you to set aside the actual best deal in favor of one which seems cheaper, but isn't. This information may help you interpret car dealer quotes to ensure you're finding the true car pricing to compare.

Online Price Quotes
Online price quotes may or may not have extra fees and taxes included in the quote--this is a matter in which each individual car dealer chooses what to do. When you receive an online price quote, look at the bottom for the disclaimer and other notes. There should be a short paragraph which explains exactly what is or is not included in the price quote.

Quotes in Person
The only way to know exactly what is included in an in-person quote is to ask the person who quoted you the price. Make sure you go through the list of fees to watch for, so you know whether or not each is included.

When determining if certain fees are included or not, these are what you should be looking for:

  • Destination fee.This is a significant charge which you have to pay on any new car purchase. It is normally in excess of $600 depending on the vehicle
  • DMV fees.These charges are necessary to register your vehicle with the DMV. They will be the same for all vehicles of the same make and model, but will not be included in the price quote
  • State sales tax.This is usually not included in the price quote and will vary by state
  • Dealer-installed accessories. These are usually not included in the price quote unless you ask for the price of a specific vehicle rather than a base new car

What Is the Difference between the Invoice and the Car Quote?

When you walk onto a dealership, the first thing you see is the stickers on the side window of the vehicles. These are the MSRP, or Manufacturer Suggested Retail Price. Just as the name implies, it is the suggested retail price determined by the manufacturer and not the actual amount the dealer is willing to sell the car for.

A Car Invoice
The invoice is the amount the dealership pays to the manufacturer initially for the vehicle. In reality, the dealership might pay a lot less because of incentives they receive for selling certain models or bonuses for selling large volume of cars in a month. This is how a car dealership can sell you a car at or close to their invoice price and still make a profit.

A Sales Quote
A sales quote is the amount at which the car dealership is willing to sell you the car of your choice. It is printed out detailing the complete deal. To come up with this price, the salesperson will offer you the highest price you will accept and have the dealership make the profit it desires.

The salesperson will ask many questions, like how you plan to pay for the vehicle and if you have a trade-in vehicle. They will ask if you will be financing the car or leasing. Next they will ask if you will finance through their financing company. If you have outside financing, they will not lower the price as much, since they get commissions from their financing companies.

If you are financing or leasing the car through them, they will ask you how much you can afford to pay each month. Next they will ask the amount you can give for a down payment. All these items are used to determine what price they will sell the car.

Once you come up with an agreed price, they will show you the printed sales quote and ask you to sign an agreement stating you will purchase that car for the price they are offering.

After the Quote
After you sign the quote you have to visit the finance manager. You need to remember, the quote is for the purchase of the car. There are still more items you need to pay for. There are taxes, licensing, and many other items. The finance manager will then discuss the quote, the financing, and the car warranty. They then may try to sell additional packages such as extended warranties. Be careful, everything they offer will increase the payment you had agreed upon with the salesperson. If you feel uncomfortable, you have every right to walk out before you sign the sales and financing agreements.

Why Are the Car Quote and MSRP Amounts Different?

The MSRP is also sometimes called a list price. It is a standard value set by the manufacturer. The MSRP is the result of legislation passed decades ago to stop auto sellers (dealers) from charging radically different prices for the same vehicle. However, the MSRP is not what most buyers and sellers agree on as the actual price for a new car. According to auto sales experts, it's more of a conversation starter that the buyer and seller use with a lot of other factors to come to a final agreement on price.

Other Factors
One huge factor that the MSRP doesn't take into account is car dealer cost. A dealer in a rural area zip code, may not have the same cost or overhead as a dealer in a different zip code, neighborhood or area. Dealers may also buy from the manufacturer at different prices with bulk deals or other arrangements. That means the dealer will price cars to make a profit, not just at MSRP.

Why Your Car Quote May be Higher than MSRP

In times past, the MSRP was set a little high, to accommodate extra charges like taxes, shipping fees, etc. Today's MSRP tends to be closer to actual market value. That means that buyers who don't account for extra charges will see their quote outpace the MSRP by the end of negotiations. That's why some buyers say they will never pay MSRP plus costs. They try to get a base price below MSRP so that those extra costs are covered in the final quote.

Car Quote Secrets

There are many points a salesperson will not mention when offering you a car quote. This is a way they make their profits while they make you think you have received the best deal.

Dealers Get Incentives Too
The invoice is the price the dealership pays the manufacturer for the vehicle. One of the secrets the dealers do not tell you, is in many cases, the dealers are receiving bonuses or factory incentives to sell certain models. The dealership might also get a bonus or "kickback" for high volume sales.

Documentation and Prep Fees Are Not Mandatory
Some of the fees listed, such as documentation fees for processing the sale, and preparation fees, for cleaning the vehicle before delivering it to you, are usually excessive. This is one way they make additional profit.

They're Not Using Your Credit Score
Many times you will be told your credit score is not high enough to get a better interest rate on financing. Many car dealerships do not use the regular FICO credit scores. There is an Auto Industry option that adjusts your ratings based on past car loan history. Depending which score is lower, that is the score they use to get your financing. The more you pay in interest, the more of a commission the dealership receives. Many times the dealership makes more from their financing commission than they make from the profits of the actual sale.

Dealer Extras May Not Be Premium Products
Many times the dealer will point out options included in the car such as upgraded sound systems. In many cases this equipment is by unknown manufacturers and listed at prices more expensive than purchasing on your own. Since they do not want to remove these items, they will lower the price.

The Dealer May Not Be Best for Aftermarket Options
If there is optional equipment you want added, you can probably get a better price outside of the dealership. Check prices before you buy. Many times they will lower the price to match their competition. If you buy it from the dealer, it will increase your financing total and increase their bonus.

Extended Warranties Are Not Necessary
Even if you are planning to keep the car for many years, an extended warranty covers the same period as the factory warranty. One of the things the dealership does not tell you is their fee is inflated, and then when it is included in your financing, it increases their bonus. If you need an extended warranty, you can get one later.

You May Already Have Credit Life and Disability Insurance
This is another item they try to sneak into your agreement. These insurance plans make your payments if you are disabled or die during the terms of the loan. The disability coverage does not go into effect until you have been disabled for fifteen to thirty days. If you are employed, you might already have this coverage.

They Want to Sell You a Car Today
One of the rules of car salesperson is making the deal that day. They feel, once you leave their dealership, you will not be back. Once they make you an offer, tell them you plan to visit another dealership or need to leave for an appointment. At that point they will find other ways to lower the price.

What Information Do I Need to Submit to Get a Car Quote?

The first thing to note is the type of model you desire. After that, there are more choices to narrow down the search. Online services are an easy way to help compare vehicles, options and prices.

Model and Style
If you looking for a certain type of car, or specific model, there are many factors you need to consider. There are economy vehicles, sports cars, mid-size sedans, large luxury cars, and SUVs. In all the categories there are a variety of sizes or styles. Do you want a full-size trunk, a two-door or four-door model. Maybe you want a convertible or an operable sun roof. Is this a family vehicle or something for your business needs?

Once you decide on the type of vehicle, you need to decide what options you need. Do you need a high performance sound system, or maybe Bluetooth compatibility? You might want a built-in GPS or an anti-theft system. If you have young children and plan to make long trips, you might want a built-in DVD player to keep them occupied.

Another decision to include is the color and trim package on the vehicle. Do you prefer a certain color or want special exterior items such as chrome wheels. If it is a SUV, do you want running boards along the base of the doors? Maybe you want fog lights or other optional special light packages.

Submitting for a Quote
If you're using an online service to locate a car, these sites have all the above choices in easy-to-use selection menus that will walk you through the process. Depending on manufacturer or model of vehicle you will see a list of all the items available.

Once all the choices are made, you then have to provide your personal information. One of the items is your zip code. With this piece of information, the company can locate a dealership that carries the vehicle you want to purchase. Entering your zip code can also determine the price. Sometimes the car you are looking for is not available locally, the service will see if that model is available at another dealership and will include in the price the cost of shipping the vehicle to a closer location. If this is the case, changing the zip code or increasing the search area can get you a lower price.

After you're done, there should be a list of available cars, the dealerships location and the price for the vehicle.

The Role of Options in Your Car Quote
If there are specific options you want in your new vehicle, some manufactures will allow special orders. The consumer can visit a dealership and itemize every detail they want included in their car. However, this is becoming more difficult for many reasons.

Each year there are new models produced. The current model's production ends months before the new model season begins. This is because the manufacturers need time to set up production for new models and to ship the vehicles to the dealerships. For cars produced overseas, the end of production is earlier than with domestic manufacturing.

Cars are produced with different option packages for the consumer. These vary from a basic model to a model fully loaded with every option, with a model in between. If the local dealer is out of stock on a specific color or option package you desire, they will try to contact other dealers who might have an appropriate vehicle in stock. The car will then be delivered to your local dealer for the sale.

Adding or Removing Optional Equipment
Car options have a range of items such as the color of the interior, the exterior, seat coverings, type of audio system and many others. Most of these options are included in the car when shipped from the manufacturer. When you visit a dealer, they have models to choose from with more or less of the optional equipment already installed.

Many dealerships are not willing to have the manufacturer installed options removed. To have these options removed to lower the price of the car usually costs the dealership more than the price reduction. They need to pay a service technician to remove the item. This removed item, in most cases, has little or no use. If it is a trim item, the removal usually causes damage to the item and even to the vehicle.

Some items, such as an alarm system, leather seats, and tinted windows can be installed by the dealership or by a dealer recommended contractor. Many times, these options can be purchased and installed after you have purchased the car and for less money than the dealership charges. The dealership may also get a commission from the outside supplier and installer.

Special Ordering High End Vehicles
Many of the high end luxury manufacturers still allow special ordering of their vehicles. The car will be manufactured per your requirements. This can take months from order to delivery. These cars are already expensive, and special ordering will increase the price considerably.

Aftermarket Customization
There are many specialty shops that specialize in alarms, sound systems, upholstery and paint. If there are options you desire and the dealership is unwilling or unable to install them, one of these shops are available to assist you. These businesses are experienced in their product and can assist you in finding what you want or need in your vehicle. Many times, these shops will provide you with a higher quality item for less than a dealership will offer. Also, make sure, adding an aftermarket item will not affect your new car warranty.

How to Use the Kelley Blue Book for Car Quotes

The Kelley Blue Book site is a great resource for any car shopper looking at car quotes from dealers. Here's how to use it to your advantage.

Kelley Blue Book for New Cars
If you're looking to match a Kelley Blue Book value to a new car quote, get onto the Kelley Blue book site and select the year and model. You'll see a price that corresponds to MSRP or other price estimates. This is not necessarily what you should expect from your dealer. However, a new car estimate on Kelley will show you what that car is generally worth on the common market.

Kelley Blue Book for Used Cars
For used car quotes, there are several ways to use Kelley Blue Book values. You will see these when you go onto the site and enter in used car information. The first value is a "Suggested Retail" value that shows what a dealer might charge for that car on the lot. The second value is a "private party" value. This is what a shopper might pay when buying that used car directly from the owner. The third value is what might be secured at trade in time.

Either way, the Kelley Blue Book represents a handy common value for a specific kind of car. It is never a direct value for the specific car in question. In new cars, dealer costs enter the equation, and in used cars, conditions and features make a big difference.

How Car Quotes Can Vary from Dealer to Dealer

Final new car quotes vary a lot by dealer. Here are some of the reasons behind the different prices you may find when you shop around for your next new car or truck.

Dealer Overhead
A big factor in the final car quote you get from a dealer is the overhead. Dealers need a profit margin, and to accomplish this, they need to offset the cost of advertising, lot space, labor, shop costs and a whole lot of other items. The way your dealership does business will affect what price they want for the new vehicle you're looking at. That doesn't give the dealer the right to inflate prices endlessly, but it will influence the price above or below MSRP.

Dealer Location
Auto sale prices also vary because of a dealer's location. A cost-of-living index can vary from one zip code to another. Dealers in one neighborhood may be able to offer better prices than another lot, even if they are only a few miles away from each other.

Profit Margin by Any Means
The MSRP or sticker price on a new vehicle is a kind of price control, but because of the issues above, dealerships always need to make a profit. One way that the dealership does this is to add on to a basic car quote price with items like extended warranties and other services. Some customers feel that dealers routinely overvalue warranties or anything else on the bill to pump up their profit margin at the expense of the buyer. Always get an itemized quote and talk to dealer reps about anything they think is excessive.

Getting an Exotic Car Quote

A fair car quote on an exotic vehicle could result in saving you tens of thousands of dollars. It is always important to be vigilant in your search for dealers that are willing to provide discounts on these high-end, luxury vehicles.

Visit the Manufacturer Website
First, find dealers that offer the exotic vehicle you're interested in. Visit the manufacturer's website and click on the link for authorized dealers or dealers that sell the type of vehicle you're interested in. While it is important save money on an exotic vehicle, it is also very important to purchase the vehicle from an authorized dealer. This is because repairs and service associated with an exotic vehicle can be very expensive. Dealers other than authorized dealers generally cannot supply you with quality service and warranty protection.

Submit Your Quote Request
Once you have a list of authorized dealers for the particular exotic vehicle you want to purchase, you should visit the websites of the dealers or contact the dealers by phone to request a price quotation.

Try CarsDirect
Although you can use the above method to search for fair price quotations on an exotic vehicle, your first stop should be CarsDirect. CarsDirect offers fast free price quotes on any type of new car or truck--including expensive, exotic vehicles. Therefore, if you want to find the truly lowest prices on exotic vehicles, you should think of purchasing one through one of CarsDirect VIP network dealers.

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