Knowledge of the invoice cost on a new car or truck will allow you to negotiate a better purchase price. Information on invoice cost of different vehicles is readily available and there is no reason to go car shopping without first researching this cost.

Identification

A car dealer receives an invoice along with every new vehicle that comes from the factory. The invoice lists the manufacturer's suggested retail price--MSRP--and the net cost to the dealer of the base vehicle and all of the optional items. The total of the net costs of vehicle and option is listed on the bottom of the invoice as the invoice cost, or what the dealer must pay for the car or truck.

Function

When negotiating, a dealer will try to hold a certain profit margin over the invoice cost. The margin amount depends on the popularity of the vehicle and how long the car has been in the dealer's inventory. The lowest price a dealer will sell for can range from the below the invoice cost up to the MSRP.

Determination

The invoice cost can be found and calculated at the major online auto pricing websites such as Kelley Blue Book, NADA guides and Edmond's. Remember to include the correct options to come up with the correct invoice cost. A dealer who is willing to sell at or near invoice cost will show you the actual invoice.

Misconceptions

There are several items on the factory invoice that many buyers and online experts believe should be subtracted from the invoice cost to calculate the dealer's true bottom line cost. The destination or shipping charge is an actual cost to the dealer. Advertising charges are only reimbursable to the dealer against incurred advertising costs. Holdback is additional money the car manufacturer will pay back to the dealer at a later date, but most dealers will not negotiate the holdback.

Considerations

Any factory rebates reduce the net cost to the dealer and the customer. Subtract any rebates from the price you will pay after negotiating the price. A dealer will almost always make a deal if your best offer allows some level of profit over the invoice cost of a vehicle. A good number offer to start negotiating is a few hundred dollars below your calculation of the invoice cost. Increase your offer in two to three hundred dollar increments until the dealer accepts.

Source:

Superpages on dealer invoice

Whatever he can soak you!