New Car Price Guide

In order to be able to negotiate a better deal, whether you buy or lease a new car, you must first understand how car pricing works. This new car price guide will help you learn more about the different prices of new cars.

Manufacturer's Suggested Retail Price (MSRP)

Let's start with the Manufacturer's Suggested Retail Price or, as it is often referred to, the sticker price (since this is the price shown on the car's window sticker).

This is the retail price hat auto manufacturers recommend for each of their car models. This price can change from year to year so when you check the sticker price of a vehicle, make sure you get an updated one.

Note, that the MSRP price is only recommended (suggested) and the dealer is perfectly free to charge a higher or lower price if he decides.

Invoice Price

Dealers are not ordinary customers. They are businesses that buy wholesale (at a wholesale price). The price at which dealers buy from manufacturers is called dealer invoice price, or also factory invoice price.

The invoice price, however, does not determine on its own how much a car would cost a dealer. There are other factors beside it that determine the dealer's actual cost.

To start with, these are the costs related to running the dealer's business, such as rent, employee salaries, utilities, taxes, etc. In addition to that, dealers need to pay interest on the loans used to buy vehicles from the manufacturer.

Holdbacks

Special bonuses and rebates are offered to dealers from manufacturers, which additionally reduce dealers' costs. Such bonuses are the holdbacks.

Holdbacks are a type of rebate that is received after a car is sold. It is usually 1%-2% of the car's MSRP or invoice price and is intended to compensate the dealer for various fees that are incurred while the car stays unsold.

Beside holdbacks, the dealer may also receive factory-to-dealer rebates or bonuses which provide additional potential profit. These bonuses, factory rebates and holdbacks altogether sometimes allow dealers to sell their cars at a price lower than the invoice price, and still make some profit.

The information and interactive car payment calculators that are provided on this site are made available as general assistant guidance in regards to car loans and payments. We do not guarantee that any information or calculations will be accurate or applicable to your personal financial situation, circumstances, or objectives. Accordingly, before making any final decisions we encourage you to consult a qualified professional and get personalized advice.

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