Understanding the New Car Dealers Cost
Most everyone wants to buy a car below the new car dealers cost. Many people however believe the new car invoice price is the car dealers cost. This is never the case. The car dealers true cost may contain the following attributes:
So as you can see, if you want to be assured you are buying a car below the new car dealers cost, you may need a few accountants on hand to determine what their true cost is.
- Factory to Dealer Holdback
- Factory to Dealer Incentives
- Dealer Floor Plan Interest Payments
- Special Pricing for Factory Employees
New Car Dealer Hold Back
On new cars for sale there is an amount of profit held back by the factory. This Hold Back amount is usually listed on the invoice. Unless you're familiar with a particular manufactures invoice it is impossible for most new car buyers to distinguish the hold back amount from other items on the invoice. The hold back amount is never labeled and sometimes it's even cryptic.New Car Dealer Cash
Factory to Dealer Incentives Often, automobile manufactures give incentives to the dealer to sell more cars instead of or in addition to new car incentives to the consumer. More often than not these incentives are not public knowledge, in other words consumers can rarely tell whether or not a dealer is receiving an incentive from the factory. We should also note that these incentives, often referred to as dealer cash, could be based on sales volumes so their value can differ from new car dealer to new car dealer.
Floor Plan Interest Cost
Dealer Floor Plan Interest Payments Many dealerships have to borrow the money to buy new cars from the factory. This line of credit extended from a financial institution is called a Dealer Floor Plan. Often the new car dealer will negotiate a 60 day interest free period. If the new car does not sell within that period then the new car dealer has to start paying the lender interest on the balance of the floor plan amount. It is impossible for new car purchasers to determine this amount, however, if you are looking at the invoice, the older the date, the more likely it is that the new car dealer cost is increasing due to interest payments.Employee Disount Cost
Special Pricing for Manufacturer Employees Manufactures have special pricing so that their employees can buy a new car below invoice. When this is the case the dealer is reimbursed from the manufacture for the special discount. Employee pricing is, however, fixed, new car dealers are not allowed to deviate from the pricing set by the factory.So as you can see, if you want to be assured you are buying a car below the new car dealers cost, you may need a few accountants on hand to determine what their true cost is.