No one wants to pay more than she has to for a new car. When the manufacturer's suggested retail price seems too high -- which it nearly always is -- you have tools to help you get the price lower. The key is having price points that better reflect the dealer cost and what others are paying. Numbers reflecting the dealer invoice and incentives can be found for each make and model on car-evaluation websites like Edmunds and TrueCar, as well as in Consumer Reports.
The MSRP is just that -- a suggestion. Depending on market conditions, you occasionally may have to pay that price, but your goal is to go as far below that as possible. While the salesman may focus on the sticker price, you should focus instead on the invoice price. This is the official price paid by the dealer. Also, research the true market value -- the average other buyers are paying in your area. You can find invoice prices and geographic average prices by checking the information for your preferred car on web sites such as Edmunds or TrueCar.
While the invoice price gives you an idea of how low you can go, it's not an accurate picture of what the dealer is paying -- and hence, what a fair deal looks like. To obtain the true dealer cost, you'll need to add the destination charge, or factory-to-showroom delivery charge, plus any options on the car. Then subtract dealer incentives, as well as the holdback, which is a percentage of the MSRP refunded to the dealer when the car is sold.
The dealer will likely start with the MSRP as a starting point and work down, while you want to begin with the invoice price and go up. You should aim for the true market value, or slightly less. One approach is to start by offering the dealer $100 more than invoice price. Don't change your counteroffer until you get another counteroffer. Then go back and forth until you obtain a price between the invoice price and TMV.
Your salesperson isn't the only one with tricks up his sleeve -- you, too, can toss a few of your own. Buying at the end of the work week, end of the month or end of the year can get you right in the thick of a dealer's quota-meeting crunch time or "clear the decks" mentality. Seek out vehicles that are overstocked, out-of-season, or soon-to-be-replaced with a new model. The dealership will have extra incentive to get those vehicles off the lot.
