Find Out What the Dealer Paid for the Car
The true dealer cost is made up of four components – Dealer Invoice, Advertised Rebates, Hidden Dealer Incentives and the Holdback. So before we do anything else, we have to find out what the dealer paid for the car.
Dealer Invoice – Edmunds is a good on-line source to calculate Dealer Invoice pricing. Using Edmunds is straightforward. Choose the make and then the model of the car, click on the style that you want if there more than one, and then click on the Price with Options button. It will give you the MSRP (Manufacturers Suggested Retail Price – the sticker price) and the Dealer Invoice for the car and for each option or option package available. Print that page, you will need it later. (Ignore the True Market Value price. That’s just there to placate the dealers so they won’t be too mad at Edmunds for giving away all their secrets. You will be able to do better than the TMV price).
Advertised Rebates – There may be advertised Cash Back rebates for the car that you want. For example, the 2015 Ford Taurus has a $3,000 advertised rebate which they must give to you if you buy the car plus an additional $2,000 if you finance with Ford Motor Credit Company. You need to know what the rebates are in advance, since they will affect your opening offer to the dealer.
Dealer Incentives – Surprise! There may also be hidden incentives that the manufacturer gives to the dealer. You can only get this incentive if you know it is there. Otherwise the dealer keeps the incentive. These rebates and incentives change from month to month so you need to get the most recent information. Edmunds has a complete database both advertised and hidden rebates .
- The Holdback – The Holdback is a hidden rebate that is paid directly to the dealer by the manufacturer for each car sold. Go to the Edmunds Data Base of Current Holdbacks and copy down the Holdback for the car you want.
Determine Actual Dealer Cost
- Put the Cost Data Together
Let’s say that you have decided on a Roadster Supreme with an MSRP sticker price, including all options, of $26,000 plus $800 for delivery. Your research comes up with the following information: