Why It's Important to View Invoice When Negotiating
There are generally two prices you'll encounter for each vehicle, the MSRP (Manufacturer's Suggested Retail Price) and the Invoice Price - which is what the dealer pays the manufacturer for the vehicle. Think of it as the wholesale price.
Dealers want you to focus on the MSRP, which includes a 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, depending on how poorly the model is selling. 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, or simply because they're too lazy. 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.
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid