Negotiating Car Price
There are several steps involved when negotiating to buy a new car:
(1) the price on a new car you are buying
(2) trading-in you used vehicle
(3) your method of payment
It is very important to keep all of these issues separate. Deal with each subject independently so not to confuse the final price of the new car you plan on purchasing.
Remember to take along your new car price quote. Although this represents the car dealers best possible price, there is always room to push for an even better deal on some vehicle models. Auto manufactures often want to get rid of slow selling cars or reduce inventory, therefore they offer cash rebates or special low financing deals.
If the car dealer sells you a car at the invoice price, he will still make a fair profit as the manufacturer refunds a certain percentage of the car’s price to the dealer. This is known as car dealer hold back. The car dealer holdback is a specific percentage of the car’s price that is credited to the dealer’s account periodically by the manufacturer and reduces his cost by as much as 2-3%. This can start to add up significantly, 3% on a $20,000 car is $600. The dealer could sell you the car at his invoice price and still make $600 profit. Ultimately, if you end up buying a new car for $100-$300 over dealer invoice price you have a great deal and the car dealer has made a reasonable profit.