Factory invoice and dealer invoice are two prices that you may come across while you are researching your new car. Figuring out which one is a realistic price to pay can be difficult. We are here to help you understand the difference between these two prices.
Dealerships have a tendency to use many different terms when referring to car prices. This is in part done on purpose, to keep the buyers guessing. If a new car buyer is unsure of what a price really is, dealerships can alter prices to their liking.
To avoid paying more than what your new car is actually worth, you must learn the essential pricing terms.
The factory invoice price can also be referred to as the MSRP (manufacturer’s suggested retail price). This price is given to the new vehicle by the factory that builds it.
The factory invoice price is a good price to research, because it can give you a good base idea of how much a car is worth.
To determine the factory invoice price, the manufacturer calculates how much it cost to build the vehicle and destination fee charges. The destination fee refers to the shipping and handling costs associated with delivering a new car to the dealership lot. This fee is often passed along to the buyer.
The factory invoice price goes one step further though, and also adds on a certain percentage for dealership profit.
It is important to be aware that the factory invoice price is just a suggested price. Dealerships are not obligation to use these as their actual prices.
The sticker price of a new vehicle is the target price a dealership is selling it for. Often the dealership will charge higher than the factory invoice price, for the sake of gaining a bigger profit. As a buyer you should avoid paying Sticker Price.
The dealer invoice price is what the dealership actually pays for its new vehicles. This is a discounted price offered from the factory to the dealership. This price is the closest price to the true value of the car.
When you know what the dealership pays for its new cars, you can get an idea of what you should pay.
Start by requesting a free, no obligation price quote for the new car you want to buy. You will receive dealer prices, the factory invoice price, and also the dealer invoice price.
Make a note of the sticker and factory invoice prices, but focus on the dealer invoice price. Negotiate for a price as close to dealer invoice as possible to enjoy you pay thousands less for your new car!
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