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MSRP vs. Invoice Price


Understanding the difference between MSRP (Manufacturer’s Suggested Retail Price) and the invoice price can save you money when buying a new vehicle. MSRP, you might know as the sticker price. The automaker sets it and it is higher and easier to find. Dealers usually list it on the car’s window, and their websites. It includes the base price, factory options, dealer add-ons, and destination charges but excludes rebates, taxes, and fees. While you can negotiate down from the MSRP, it’s often more effective to negotiate up from the invoice price.

The invoice price is what the dealer pays the manufacturer for the vehicle and is typically lower than the MSRP. However, it’s not readily accessible and requires some effort to obtain. Knowing the invoice price can give you a starting point for negotiations. That starting point is most likely closer to the dealer’s cost, which can lead to better deals.

To get the invoice price, you can ask the dealer directly, indicating your intent to make a deal while demonstrating that you’re informed and shopping around. This approach can help you negotiate more effectively, aiming for a fair final price rather than focusing on monthly payments, which dealers often manipulate to their advantage.

During the buying process, be aware of additional fees and optional add-ons presented by Finance and Insurance (F&I) managers. These add-ons, such as extended warranties and accessories, are often unnecessary and can be expensive if financed with the car loan. If interested, consider paying for them in cash to avoid long-term interest costs.

Understanding and leveraging the difference between MSRP and invoice price can significantly impact your car-buying negotiations, leading to substantial savings. Aim to start negotiations at the invoice price, seek out manufacturer rebates and dealer incentives, and be cautious of additional costs during the F&I process. This strategic approach can help you secure the best possible deal on a new vehicle.
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