Why It's Important to View Invoice When Negotiating
Dealers want you to focus on the MSRP, which includes a hefty profit, but what you really need to focus on is the invoice price. When it's all said and done, the dealer's true cost for the vehicle is usually lower than the invoice price. This is because dealers get additional kickbacks through hidden incentives and holdback.
It's not uncommon to purchase a car for below invoice price - sometimes for thousands of dollars below invoice. Nevertheless, the car buying method I recommend involves negotiating based off of invoice price. But to do this properly, you need to see a copy of each dealer's official vehicle invoice.
The reason is because some dealers will try to add useless options to the vehicle and quote you a price based off of a fake dealer invoice price. These options may include things such as a "Dealer Protection Package", which may include fabric and paint protection. I've seen some charge as much as $1,000 for these useless items.
You need to ask dealers to email or fax you a copy of the official invoice. This way, you can see all the factory installed options and all the legitimate fees that are included in the invoice price.
Some dealers may try to send you a "dealer generated invoice" which is basically an internal document listing their own unofficial prices including dealer-installed options. This is NOT the real invoice. A real vehicle invoice will have the manufacturer's logo at the top and will be addressed to the dealer. It will include all factory installed options along with the invoice price for each one. It will also sometimes include regional advertising fees or other fees that are legitimate.
Here is what a real vehicle invoice looks like:
On rare occasions, a dealer may refuse to send you the official invoice citing dealer policy. In cases like this, you need to pay close attention to the invoice price they quote and make sure the price matches what you find with other dealers or online.
As long as you can get the vehicle invoice from a couple of other dealers, you should be able to determine if another dealer is trying to fudge the invoice numbers.
My Recommendation for Car ShoppersTrueCar No-Haggle, Edmunds Price Promise and 1-800 Car Show are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
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About: Gregg Fidan
Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.