How to go about paying for a new car

3rd January 2016

Are you considering a new vehicle?  Fortunately, with being a consumer, you have many resources that you can look at to assist you with getting to a price that is fair for both you and the dealer you are buying the car from.  Here we will explain the four basic kinds of vehicle pricing you will find on the internet:

Manufacturer’s Suggested Retail Price (MSRP)

The manufacturer sets the MSRP, a “suggested price.” By law, this price is shown on every vehicle up for sale in the United States. Does anybody seriously pay MSRP?  Not often but it does happen.  For example, where demand is higher than supply, buyers sometimes pay above the MRSP. Here is one occasion when that occurred: when the Chrysler PT Cruiser first became available, prices well above MSRP were demanded. Many prospective automobile buyers consider the MSRP the place to begin at whilst negotiating.

Dealer Invoice

The dealer’s raw cost for the vehicle itself from its manufacturer is the dealer invoice. Knowing the dealer invoice price can be helpful, but it does not always tell the whole story; it excludes all of the dealership’s costs to “keep the lights on”; things like advertising fees, vehicle prepping, sales expenses and displaying or their financing of the car. Manufacturer’s incentives and “holdbacks” are behind the scenes and may actually cut down the raw manufacturer’s price below invoice.

Average Dealership Markup

What the dealership is asking for the car up and over the invoice price is known as the “average dealership markup.” The truth is, which is not most peoples’ opinion, dealers actually don’t make much money on new cars. Dealers make the majority of their money on service and parts and through sales of used cars. Our advice is to be sensitive towards the Average Dealer Markup because it’s important to have a local car dealer remain in business when you own one of their cars, as car dealers have to make a living as well!

A Fair Price for the Purchase

The Fair Purchase Price (FPP) is the industry’s newest and very reliable vehicle pricing tool that is updated once a week. Based on clearly indicated make and model vehicles, FPP price reports tell you a new vehicle’s average selling price and it’s usual range of selling prices.. You should know that an FPP is actually not a number influenced by dealers or manufacturers — it’s actually real transaction data. It works similarly to the stock market, changing over time to reflect on on real market transactions. For those researching vehicle pricing, the Fair Purchase Price has become an invaluable resource.

Final Remarks

Now that you are armed with some additional facts about getting a fair price for a car, you will likely make a good choice about what to pay for the vehicle that works best for you. After you have done all your research and know what you want, the next step is to agree on a price and make the deal.

Article courtesy of: Thompson Mazda

Corey is an all round tech guru who has worked at some major blue chip companies. He started Poweronemedia to share his views and knowledge with the rest of the blogging world.