Out of the top most expensive purchases consumers make in their lifetime a new car is second only to a home. According to the National Automobile Dealers Association (NADA), the average price of a new car sold in the United States was over $24,000. Knowing that a new car will cost you thousands of dollars you must learn ways to get the best deal you can.
Buying Your New Car
Make sure you do plenty of research in deciding what car model and options you want and the amount you are willing to spend. If you do lots of research online and in publications that NADA puts out you will be less likely to be pressured into a bad deal at the dealership.
Suggestions to look over when buying a new car:
Research publications at libraries, bookstore, or on the Internet, that discuss car features you are considering and prices. Publications like Consumer Reports come in handy for this! These publications may provide information on the dealer’s costs for models and add-ons.
Shop around to get the best possible price by comparing models and prices in ads and at dealer showrooms.
Plan to negotiate. Dealers are always willing to bargain on their markup often from 10 – 20 percent. This is normally the difference between the manufacturer’s suggested retail price (MSRP) and the invoice price. Keep in mind that negotiating the price can save you money in financing as well.
You can always order your car if you don’t see what you want on the showroom lot. Make sure you get the car you want even if there is a delay. This is a big purchase and its best to get into something you want to keep at least until its paid off. Although, dealers often want to sell their current inventory quickly, so you may be able to negotiate a good deal if an in-stock car meets your needs.
The Terms of Negotiations
The Invoice Price is the manufacturer’s initial charge to the dealer. The invoice price is usually higher than the dealer’s final cost because dealers receive rebates, allowances, discounts, and incentive awards. Furthermore, the invoice price should include freight (also known as destination and delivery). If you’re buying a car based on the invoice price (for example, “at invoice,” “$100 below invoice,” “two percent above invoice”), and if freight is already included, make sure freight isn’t added again to the sales contract.
Base Price is the cost of the car without any added options, but includes standard features such as equipment and factory warranty. This price is printed on the Monroney sticker.
Monroney Sticker Price (MSRP) shows the base price, the manufacturer’s installed options with the manufacturer’s suggested retail price, the manufacturer’s transportation charge, and the fuel economy (mileage). Affixed to the car window, this label is required by federal law, and may be removed only by the purchaser.
Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.