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| | | To get the best price on your new car, you need to know how much the dealer paid for it. Some cars, such as the Toyota Prius in California and Massachusetts, sell for MSRP or even more due to the high demand. In these cases, you'll be fortunate to pay sticker price. | | |
| Typical costs: | - For most cars, you'll want to know what the dealer paid for the car, so you can offer a fair profit - often 4-10% above that price. To find out how much a dealer paid for the car: Use a web site such as Edmunds to find out the Invoice Price for the make and model you are interested in.
- Add the destination charge (often around $500-$600) to that price. This is the fee the dealer must pay for the car to be delivered to them.
- Use a web site like Edmunds to find out any current dealer incentives. This is additional money the car manufacturer pays to the dealer. By clicking on the "incentives" link on Edmunds, you can see any Manufacturer to Dealer incentive payments. Subtract this amount from the price.
- Use a web site like Edmunds to determine the Dealer Holdback. This is money the dealer overpays for the car and gets back on a regular basis. Often it's 3% of the MSRP value of the car.
- The bottom line dealer price is: The Invoice Price + The Destination Charge ($500-$600) - Any Dealer Incentives - Any Cash Holdouts
- This is the price the dealer has paid for this car. Depending on current market conditions, you can start negotiations at what you believe is a fair profit on top of this price. Consumer Reports recommends 4-8% in addition to the dealer's price. During our tests, the Edmunds "True Market Value" price "What Others are Paying" averaged 6-7% more than the dealer price we calculated.
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| Shopping for a new car: | - To see the prices of some of the car dealers near you, you can try vehix.com to get started. The site will let you see the inventory of local dealers and sort by the price column. However, after you use vehix, you might try getting a better deal at a local dealer.
- Tip: Costco and AAA offer members what they call "hassle free, haggle free pre-negotiated car prices with dealers". We found only Costco's program to provide useful information because they ask for a make, model and year, so you can get a quote for an actual car. Warning: We didn't find these programs to be "hassle or haggle free." For some of these programs, we were barraged by phone calls offering "VIP meetings" with sales managers to negotiate a "special" price," which we hardly consider "hassle or haggle free."
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Article updated November 2006 |
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