How to Get the Dealer’s Secret Price

June 16th, 2014

car dealership

A car dealer’s secret price sounds mysterious, right?

As I partake in my daily adventures on this vast ocean of online sensory overload known as the Internet, I see a lot of ads promising to reveal the secret to obtaining access to the “secret” price of dealers.

The idea of a “secret price” that dealers hold in a vault and disperse to only a lucky few is a complete myth. True, there’s an invoice price that usually serves as the Holy Grail of car shoppers, but even that can be deceiving due to manufacturer holdbacks and other factors.

So how do you become a savvy new-car shopper and get the best possible price?

The first step is to know the terms you’ll come across when negotiating with the dealer. Of course, car dealers want to make a profit, and some deceive to do so, but your job as a buyer is to make that profit as small as possible.

The invoice price of a new vehicle is the price on an invoice the manufacturer sends a dealer when they acquire a vehicle. It might look like that price is the true dealer cost of the vehicle, but in many cases there is hidden profit built into the invoice price. Dealer holdbacks are one way to do that.

A holdback usually reflects a percentage of the invoice price that is paid back to a dealer by the manufacturer. They allow dealers to offer better deals while still earning handsome profits. Dealers can legitimately say they are offering vehicles at invoice prices, but they can recoup hundreds of dollars later.

If there’s a secret price in the dealer world, it’s the value of a holdback. It’s good to know they exist, but you probably won’t have a lot of luck using them directly in negotiations. The best way to get the best price is to pit dealers against one another.

Start by finding the exact car you want. Get specific on the make, model, trim level and options, then locate the vehicle at a dealer and negotiate a price. Next comes the fun part: Leave.

Yes, you’ve invested a lot of time, but you’ll do well to take that number to another dealer and give them the opportunity to beat it. If they can, you’re in luck, because you can take their new, lower number back to the original dealer and see what they can do for you. That’s where the holdback can make all the difference!

This is a proven method and, in my humble opinion, the best way to get the lowest possible price.

However, I will say this: Sometimes you’ll get a better feeling from one dealer than another. It might be worth paying a few extra bucks for the peace of mind you’ll get by knowing you’ll be properly taken care of after the sale.

That’s the real secret in purchasing a new car. If it’s all about price, you can certainly keep pushing until you’ve reached the absolute bottom. Sometimes, though, a good relationship with your dealer will pay dividends in the end.

Do you have any secrets to getting the best price on a new car?

-tgriffith

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