Making a Fair Offer

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When you go into a dealership, you want to know all of the pricing and costs of the car that you are planning to buy. You should know the manufacturer's cost and the dealer's cost. You need to calculate the cost that the dealer paid for the car and then make a reasonable offer if you want to get somewhere. You should also know that the dealer's price is not the invoice price from the factory and is much lower than the factory's cost.

In order to make a fair offer to a dealership, you need to learn to read a factory invoice. Here is what you can expect to find.

Base model of the car.
All of the option packages.
Destination charge.
Holdback and dealer flooring help

DO NOT confuse the invoice with the MSRP window sticker because they are not the same.

Contrary to popular belief, dealers don't have to tell you the invoice on any car. This often gives the dealer leverage over you. They can offer you one dollar over the invoice. You should know that there are hidden factory incentives in the invoice price that lowers the cost of the car for the dealership. It's no bargain for you. If a dealership is very quick to show you the invoice, you should be aware that they are fully aware that they will be making money on that car off of you and they can settle at a lower price for the car. Knowing this before you walk into a dealership can be your best negotiating strategy.

Knowing this information can let you make them the same offer. If you offer a few dollars over the factory invoice (which is the actual worth of the car) then you can open your bid and let them know how much profit they can make off of your offer. Dealers are always going to try and tell you that they paid more for the cars than they actually did so that they can make a higher profit off of the sale.

Next: Making a Fair Offer (Cont.)