How Much Should You Pay For Your New Car

When you go into a car dealership, you want to knowtelling you "I'm losing my shirt off of this deal." In truth,
all of the pricing and costs of the car that you areyou are the one that is losing your shirt off of the deal,
looking into buying, as mentioned earlier. Being preparedso don't buy into it. To help you calculate what your
will save you tons...period. You should know theoffer should be to the dealership, you should get the
manufacturer's cost and the dealer's cost. You needfactory invoice price (don't forget to include the options
to calculate the cost that the dealer paid for the carin this price), and add 5% to that amount. That will give
and then make a reasonable offer. The idea is to getyou a good starting point for your offer the dealership.
a good deal rather than getting taken to the cleaners.When I mention the options, I mean the ones that you
The only way to do it is preparation and being realistic.can't avoid. Some cars come equipped with a CD, sun
You should also know that the dealer's price is not theroof etc. and these are fees that you can't avoid
invoice price from the factory. You should know thatpaying so be sure to account for these when setting
the dealer's cost is much lower than the factory's cost.your total factory invoice price. You should also be
Having said that, keep in mind that the dealer is notsure to account for any buyer rebates as well when
going to give away anything, but they might listen tocalculating your dealership offer. So in the end your
something that gets them some cash. But alwaysoffer should be calculated like this: DEALER'S COST +
work from the dealers cost. In order to make a fair5% - ANY BUYER REBATES = YOUR OFFER
offer to a dealership, you need to learn to read aCalculating your offer to a dealership is as simple as
factory's invoice. Here is what you can expect to findthat. Don't complicate it anymore and don't let the
on the factory invoice. - Base model of the car on it -dealer complicate it either. When you are considering
All of the options packages - Destination charge -how much you can afford for a car, be sure that you
Holdback and dealer flooring help Quick Tip: DO NOTdon't get sucked into paying more than that. If you are
confuse the invoice with the MRSP window stickerunwilling to pay more than your opening offer, let the
because they are not the same. Contrary to popularsalesman know that your offer stands firm and how
belief, dealers don't have to tell you the invoice on anythey will profit from the offer. In the end you will get
car. This often gives the dealer leverage over you.what you want on your own terms. Below is a good
They can offer you one dollar over the invoice. Youexample for you to follow, feel free to print this or
should know that there are hidden factory incentives inwrite down the example and put it in your car buying
the invoice price that lowers the cost of the car forfolder. You are hoping to buy a Toyota Camry. You
the dealership. You're not getting any deal here. If ado your research at DealersInvoice.com, and find that
dealership is very quick to show you the invoice, youthe invoice price is $19,922; MSRP is $22,385. The
should note that they are fully aware that they will bedealer may offer you the car for $22,000, and shows
making good money on that car from you and theyyou the invoice. You learned by researching that there
can settle at a lower price for the car. Having thisis a $500 factory to dealer incentive; and a $447
knowledge before you walk into a dealership can beholdback on the MSRP (2%). Based on the above
your best negotiating strategy. See, they will tell youcalculations, the dealer's real cost is $19,922 (invoice) -
that you can afford to buy the car at MSRP hoping$500 (incentive) - $447 (holdback) = $18,957. You can
that you will not then wonder what the actual worth ofsee that this is lower than the factory invoice number.
that car is. Knowing this information can let you makeNow, if you add the 5% for your offer to that price,
them the same offer and put you in the driver's seat.the car price will be up to $20,379 due to the addition
(OK, brutal pun) If you offer a few dollars over theof $455 for the destination charge that is always
factory invoice (which is the actual worth of the car)present. Now if you compare the MSRP offer that the
then you can open your bid and let them know howdealership had listed, you will see that based on the
much profit they can make off of your offer. Takeexample above you just saved yourself $3428. This
some time and look through these cars buying webmay seem a little complicated but if your use a
sites to get the entire factory invoice pricing of a car.pre-designed spreadsheet from or AutoUSA.com, the
Dealers are always going to try and tell you that theyprogram does all the calculation for you. A little
paid more for the cars than they actually did so thatpreparation and a reasonable offer will go a long way
they can make a higher profit off of the sale.to getting the car you want at a great price.
Salesmen will often try and make you feel guilty by