Understanding a Car Dealer's Invoice Price
Written by Lee Wyatt (last updated March 29, 2012)
What exactly is the invoice price of a car dealership, and what does it mean to the average consumer? After all, it can't really be all that important if car dealers are always selling their vehicles either at that price, or below it, right? The fact is that understanding a car dealer's invoice price is a huge step in being able to get the best possible deal on your new car or truck. Luckily, there are a few guidelines that you can use to help understand this price, and how you can take advantage of it.
- What is it? When dealing with vehicles, there are typically two types of invoice prices to deal with the factory invoice, and the dealer invoice. Factory invoice is the total cost that the dealer is charged for a vehicle. This usually includes everything, from the base cost, the options, destination fees, and manufacturer fees. What you may not know is that this does not take into account any factory incentives that are given to help boost sales. The dealer invoice is the price that the manufacturer charges for the vehicles that they purchase. This is the same general price that all dealers pay, without any of the additional individual fees that vary between the different dealers.
- Where to find it. If you look on the sticker of a new vehicle and see an invoice price, then chances are it is the factory invoice, which will usually be a little higher than the dealer invoice price. For the most part, you won't find the actual dealer invoice price listed anywhere very easily. That being said, you can find it if you do a little bit of research on the web. Be careful though that you verify whatever information that you find at least twice before you go along with that particular price.
- How is it possible to sell below invoice? For the most part, the only way that a dealer will ever sell a car "at or below invoice price" is with some massive help from the manufacturer. You will usually only see this type of sale when a dealer has built up a large inventory of older cars. This means that the dealer won't be able to purchase new cars, thereby lowering the number of sales by the manufacturer. When this happens, the manufacturer end up giving incentives to the dealer which allow the drastically lowered prices.
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