How to Use DEALER INVOICE Pricing to Negotiate The Best Deal

What exactly is the

deal

er

invoice

price? How does it work and how can you use it to

negotiate

the

best

deal

on a new car? That's what we're going to find out. Welcome to the auto help corner, where we help the consumer master the auto process. Buying and Owning a Car: Some of the smartest and most well-researched car buyers have probably heard of

dealer

invoice

pricing

, which is actually a pretty valuable tool to know if you're trying to

negotiate

the

best

deal for a car. new car in this video. We're going to talk about what the dealer invoice price is, how it works, where you can find it, and how you can use it to negotiate the lowest possible price on your next new car purchase, so the dealer invoice price is basically dealer cost or wholesale price.

On a new car, this is the price the dealer pays for the car when it comes into their showroom without any markup. Now you can see how this could be a very valuable tool for car buying because if you know what the dealer cost is. Relative to the MSRP or retail price of that car, you know exactly what the profit margin is for the dealer and therefore how much negotiating room you have in dealing with them, for example if a new car has an MSRP thirty thousand dollars before fees and taxes, but you If you know that the dealer cost or dealer invoice price for that car is twenty-eight thousand dollars, then you have about two thousand dollars of negotiating room when making a deal with the dealer, although the dealer invoice price is a very valuable tool when purchasing a new car.

To negotiate a great deal, this is not information that is typically available on the internet, you need to do some research and often sign up with a company or service that can provide you with the dealer invoice price at the time of closing a deal. However, some services provide dealer invoice

pricing

, including the service I provide to my clients, which I will link to in the description below. Now, knowing the dealer invoice price is one thing, but how exactly do you use this information to negotiate the best deal, let's look at an example of how the whole process works and how I would personally help one of my own clients negotiate the best deal on purchasing your new car, so the example we're going to follow is for a 2021. kia sportage, this particular trim level will be the exs grade with all-wheel drive and let's go over the full price breakdown and how to get the best deal on this particular car now, according to kia website, this car has an msrp of $32,695, that is the full retail price of this car, on top of that, we have to pay a mandatory freight charge, too known as the delivery and destination fee, which will be one thousand eight hundred and fifty dollars, now here in Ontario we have some little taxes that we have to add to that, but basically this will be the total base price for this car.

Now let's take a look at the program that my service uses to provide invoice pricing to my clients now in this particular model, the invoice price. is going to be thirty-one thousand and forty-five dollars, now again we have to add that mandatory freight charge which is 1850 and that gives us a total distributor cost of $32,895, which means that the distributor is making a margin of gain around 1600 on this particular. car now just because this particular car has a dealer profit margin of sixteen hundred dollars doesn't mean we can ask the dealer to give us a discount of sixteen hundred dollars;

We usually need to leave a little profit margin on the deal for them otherwise there is no incentive for them to sell us this car now some of you might be saying wait why can't I buy a car at invoice price or below the invoice price? Doesn't the dealership make money on other parts of the deal? To some extent, yes and no, there is something else known as a dealer retainer, which some of you may have heard of, a retainer is basically a small portion of the dealer invoice price that the dealer charges when you sell the car.

The holdback is typically between one and three percent of the invoice price, so for this particular car the dealer holdback is probably around seven hundred dollars now, the fact that the dealer can make an additional seven hundred dollars by selling This car does not mean they will sell you the car. at the invoice price, for one thing, the holdback is not a guarantee, it is usually conditional on selling a certain number of cars each month, so if the dealer does not meet its quota of car sales, it is possible that They don't necessarily get their retention, so they can't rely on that alone.

For your profit margin, for this deal to go through, we need to add a small profit margin to the invoice price to make it a fair deal for everyone, so let's say we add 500 to the invoice price, that way there will be a good discount. for the buyer and there is a little money to be made for the dealer, so if we add a markup of 500 to our base invoice price, which was 32,895, we now have a new adjusted total of thirty-three thousand three hundred Ninety-five. dollars, which leaves us with a dealer discount of about eleven hundred dollars off the car's regular selling price.

Now we're not done here because all we've done so far is negotiate a dealer discount on the price of the car that we still need to factor. in manufacturing incentives and rebates that can also be applied and deducted from this total price. The reason we can apply these manufacturer rebates to the price is because they are discounts that come from the car company itself and don't actually come from the dealership. and that is a big mistake because many dealers will have you believe that they are doing you a huge favor by offering you all kinds of fancy rebates and programs, but none of these things actually come out of the dealer's own pocket. manufacturer incentives paid by the car company, not the dealer, so they can absolutely be applied to the deal, in addition to the dealer discounts at the time of this recording, kia offers a variety of great incentive programs on the price of the sportage si If you're looking to make a full cash purchase, for example, you can get 2,500 cash back on the full price of the car if you finance.

However, the deal is even better because Kia offers 0.99 interest financing, which is a really low rate, but in addition. In addition, you are also paying the first six months of monthly payments, which adds up to an additional total value of up to around forty three hundred three hundred 300, depending on the equipment level, so between these two options there is no doubt that the financing will definitely It makes more sense because not only do you get an extra discount, but you also get a really low interest rate, so the cost of borrowing is extremely low. These aren't the only rebates Kia offers.

Additional refunds are available depending on what it may be. Eligible for, for example, Kia offers a loyalty program, military rebate and graduate rebate which can also give you additional discounts, so let's say you are a recent college graduate, in that case you are eligible for an additional 500 rebate on the price of the car now let's say we are making a cash purchase on the sportage, that means we are going to receive the cash rebate of 2500 and since we are recent graduates we will also receive the rebate of 500 like Well, that means that if we go back to From our negotiated price of $33,395, we can deduct an additional three thousand dollars, two thousand five hundred for the cash refund and five hundred dollars for the graduation refund, giving us a new total of thirty thousand three hundred. ninety-five dollars, so with the combination of the dealer discount that we negotiated using the dealer invoice price combined with the manufacturer rebates, we now have a combined discount or total savings of just over four thousand dollars, which which is a huge discount and an incredible offer.

For a car of this price in addition to all these great discounts, we have also avoided paying unnecessary fees or extras. The only fee we have in this price is the mandatory freight charge of $1,850. We do not have any type of administrative fees. Document fees. tire inflation with anti-theft nitrogen or something like that in the price, the only thing you have to pay on top of this negotiated total is the sales tax and license fee and that's it, the whole process I just went through is Basically, it I do for my clients on a daily basis when I try to get them a good deal on their new car purchase, but the real life experience is obviously not as direct and easy as it seems and there are many other factors and variables that are at play, which can make the negotiation process much more complicated, for example many new cars may have various options and packages and many of these things may have their own invoice price in addition to the invoice price of the vehicle itself.

The correct profit margin may also require the help of a professional because this is something that can vary greatly depending on the supply and demand of the car you are interested in purchasing, for example there are some new cars that are in extremely high condition . high demand with long waiting lists at the dealership due to very limited availability, so realistically a 500 markup over invoice price on one of these cars is not going to happen, the other things to which You need to be careful when negotiating a deal with a dealer or additional fees, add-on products and the trade-in value of your car, if you have a car to trade in just because you thought you could negotiate an amazing deal using the invoice price, it doesn't necessarily mean You may be getting the best deal on the actual purchase contract many times dealers will make you believe they are giving you an amazing deal and discounts but then they will make extra money when it comes to adding fees for selling it. expensive add-on products or reduce the trade-in value of your car, ensuring you won't pay unnecessary fees, pay for products you don't need, and won't get a low value for your trade-in. in the car are very important factors in getting the best deal possible on your new car, even if you've done a lot of research and think you know what you're doing, the process of negotiating the best price for a new car.

It's still very complicated and there's a lot of room for error, so if you're unsure about anything, be sure to consult a professional first, let me know what you thought of this video and if you have any recommendations or suggestions for future car videos or car comparisons. cars just leave a comment below if you enjoyed this video be sure to like and subscribe and if you need additional recommendations for car buying tips or help negotiating a great deal on your next new car purchase visit carhelpcanada. com, thank you very much for watching. And until next time