Buying a new car is no easy task. Calling dealerships, negotiating a fair price, threatening to “walk” if you can’t get the right deal — it’s tiring to say the least. One piece of necessary information that can help you negotiate the best price possible on your next car is the dealer cost, or invoice price that was paid for the vehicle you’re interested in.
Franchised car dealerships buy their inventory directly from their manufacturers. Similarly to you and I, dealers “floor plan” their purchases. Floor plan is industry jargon for “finance,” and it means that dealerships take out loans to pay for all of the vehicles you see on their lot, just like most consumers do when they finance the purchase of a new vehicle.
Similarly to when you get a buyer’s order for a vehicle you’re interested in, dealerships receive an invoice directly from the factory telling them the price of the car (including the destination fee) that they owe. The dealer invoice is something you’ll want access to when negotiating the price of a new car.
When it comes to used cars, they are primarily bought and sold from the auctions or customer trade ins, and in these cases looking at a dealer invoice price won’t be an option. You can always ask a dealer what they paid for a used car, but there typically won’t be a willingness to share that information.
On the new car side of things, dealers are much more likely to be open and transparent about the invoice cost they paid to purchase a vehicle. This has become a sales tactic that nearly all car dealerships use to convince customers that they are getting a fair deal. There are other ways dealerships make money beyond marking up their invoice cost, but for the purposes of this article, I want to focus our attention on how you (the customer) can get access to dealer invoice price on a car.
Ask the Sales Manager for the dealer invoice
At the end of the day, there is only one foolproof way to get the invoice price of any new car — ask the salesperson or sales manager at the dealership. This doesn’t have to be overly complicated. A quick email that says, “Hi, I am interested in this Ram 1500 pickup truck, and I want a fair deal. Can you please send me out-the-door pricing, a copy of the Monroney label, and the invoice you paid from the factory?” Will go a long way.
Referencing the out-the-door, or the on-the-road price is a great way to show a salesperson or sales manager that you know what you’re talking about, and you don’t want to spend hours discussing monthly payment goals. Asking for the Monroney label, or window sticker is also a great way to show you’re on top of your game. You want to know what options and features the vehicle has, and what better way than to look at the Monroney label? And finally, asking for the factory invoice makes it clear to the dealer that you want to make a fair deal and not get taken advantage of.
If the salesperson or sales manager you’re working with balks at the idea of showing you the factory invoice then consider working with another dealership. We all know that car dealers make money in a variety of other ways beyond marking up the selling price of vehicles. If a dealership doesn’t feel comfortable sharing a factory invoice that’s a red flag that you’ll want to work with a more upfront dealership.
The same thing applies to money factors when leasing a car. Do not be afraid to ask a dealer what the money factor is on a lease, and to follow that question up with, “Is this the buy rate, or are you marking it up?” If the dealer can’t give you a straight answer, that’s another sign it’s time to find someone new to work with.
Getting access to dealer invoice and dealer cost on vehicles, loan rates, or even money factors doesn’t have to be overly complicated. Ask the salesperson or the sales manager, and nine times out of ten, they’ll tell you.
Edmunds True Market Value
Let’s say you want to be proactive and do some research before asking a dealer for the invoice price of a car, that’s great! Recognize that there is no one stop shop with all factory invoice prices for new cars online. There are however many resources available that claim to list dealer invoice prices.
We recommend you refer to Edmunds True Market Value.
Edmunds True Market Value will not provide you with the exact invoice that a dealership paid for a new vehicle, however it is one of the most well respected and regarded pricing tools available. The only way to get the exact dealer invoice is to ask, like we discussed above. Edmunds True Market Value is a good resource to leverage nonetheless.
The easy to use software allows you to enter a vehicle’s trim and options, and then it shows you a range of prices (from the MSRP) all the way down to their suggested purchase price. In the middle you’ll find Edmunds best guess as to what the dealer’s invoice price was.
Before engaging with a dealer, I highly recommend you refer to Edmunds True Market Value for the car you’re interested in. Keep in mind that the price you see does not reflect sales tax or any applicable fees. Depending on the state you live in, that could be thousands of dollars on top of the price you see on Edmunds.
Remember, buying a car doesn’t have to be overwhelming and anxiety inducing, instead, if you follow some of our suggestions above, I think you’ll find it to be more pleasant and worthwhile!