The invoice price or dealer cost is the amount that car dealers pay for a car in total, including the cost of the base model and added options. This amount is usually lower than the advertised price, commonly known as the MSRP or Manufacturer’s Suggested Retail Price. There are, however, some notable exceptions, such as employee or invoice pricing promotions, which involve selling cars at invoice price during a specific period of time (usually summer).
Though it is commonly accepted that the invoice price is the lowest amount a consumer can pay for a vehicle, there are exceptions to this rule as well. Sometimes manufacturers push their dealers to sell vehicles below the invoice price in order to upsell a particular model or make room for newer versions. Such cases are rare, but they are still worth looking into when purchasing a new car.
The billing price on the invoice that the dealer receives from the manufacturer is often higher than the amount paid. That is because the manufacturers tend to offer a variety of discounts to the dealers that do not appear on the invoice. Most common ones are the Dealer Holdback and Dealer Cash Incentives. Other incentives are often based on factors like monthly sales or time of year.
The invoice price also does not take into account the manufacturer-to-consumer rebates or tax, advertising, license and registration fees. All of those are separate payments. They also vary from dealer to dealer. For instance, sometimes the destination fee is included in the invoice price and sometimes it is not
The bottom line is that even the most knowledgeable and experienced car buyer cannot always know the actual net cost for each dealer. That is why Unhaggle offers a free dealer cost report that keeps track of all the incentives and rebates for you. Be sure to give it a look or contact our customer service team if you have any additional questions.
Updated on March 26, 2013
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Updated on September 16, 2019
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