Buying a New Car Below Invoice Price

woman buying car

If you're in the market for a new vehicle, you know how important it is to do your homework before you head to the dealership. Ideally, all this research will let you score a great deal, sometimes below the dealer's invoice price for the car.

Seven Tips for Buying a Car Below Invoice Price

When you look at the window sticker on a car or visit the manufacturer's website to design your own car, the amount you see will be the manufacturer's suggested retail price (MSRP). This price is often hundreds or thousands of dollars higher than the dealer's cost. The invoice price is the amount the dealer paid the manufacturer for a particular vehicle. Although it isn't easy to do, you may be able to get a car at or below the invoice cost.

Research Online Deals

One of the easiest ways to save money on a new vehicle is by researching special deals online. Many manufacturers offer online rebates or other incentives, and these deals can sometimes push the overall price of the car below the invoice price.

If you're looking at several models, you may want to compare rebates side by side to help you find the best value for your money. Always print out the offer and bring it with you to the dealership.

Know When to Buy

Getting a car below invoice is easier if you know the right time to shop. One of the best times is when the new model year of the car is released. Dealers will be desperate to sell any remaining vehicles in the old model year, before their value takes a significant drop.

You may also be able to get good deals at the end of the month, since this is the deadline for a lot of dealership sales targets. In order to meet a quota and receive a special bonus, dealers must sell their cars quickly. This puts you in a good position to receive a great deal.

Explore Employer Incentives

If you work for a large corporation or a company connected with the auto industry, you may be eligible for extra savings. Some companies work out special deals for their employees, often for prices at or below the invoice for the vehicle. These discounts may also be available to family members of the employee.

To find out if your employer offers this type of discount, talk to your human resources department. If they do offer the deal, be sure to bring all necessary information with you to the dealership.

Don't Buy the Hottest Car on the Market

Depending on gas prices, advertising, and other factors, certain cars may become extremely popular. To get a good deal on your next car, pick something that isn't at the top of every buyer's list.

When cars are popular, particularly if dealers have long waiting lists for certain models, the dealer has no reason to offer lower prices. The simple law of supply and demand keeps the prices high on these vehicles, and there's little chance of getting below the invoice. On the other hand, if you choose a car that is not particularly popular with consumers, you'll be in a better position to receive a great deal.

Take Advantage of Memberships or Affiliation

Are you a member of AARP, AAA, or the Armed Services? These and other special organizations may qualify you to receive below-invoice pricing on your next vehicle.

To find out if you are eligible for a good deal, contact the organization you belong to. They will have a list of car brands or dealerships that offer special incentives for people in their organization.

Understand Holdbacks and Dealer Costs

The actual dealer cost is one of the most important things you need to know in order to save on your car. To find this out, you'll need to visit a website like Kelley Blue Book that will give you the invoice cost of the vehicle. Then you'll need to add in the cost of transporting the car from the factory to the dealership, known as the destination charge. You can often find the destination charge on the manufacturer's website.

You'll need to get an idea of the holdback for the vehicle as well. The holdback is about two or three percent of the MSRP for the car. This is money the dealer receives from the vehicle manufacturer. To get an idea of the true cost of the car for the dealer, you'll have to subtract the holdback from the invoice price and destination charge. This number will be below invoice price, and it will be your starting point for negotiations.

Know How to Negotiate

If you've calculated the dealer cost of the car and researched all of your options for saving on the vehicle, you've already done more than half the work toward getting a good deal. The rest of the process is negotiation.

Before you walk onto the lot, call around to all dealers in the area to find the best prices. Then come armed with the prices you got from other dealers, as well as your knowledge of what the dealer paid. Be firm, and don't get too attached to a particular car. Be ready to walk away if the dealer won't give you what you want on the vehicle.

Research and Patience

Buying a car below the invoice price can take lots of research and patience. However, if you employ the right strategies, you could save hundreds or even thousands of dollars on your next car. In the end, you'll be glad you worked so hard to save.

Buying a New Car Below Invoice Price