How to read a new car window sticker

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Lots of customers browse dealer’s sites like Edmond and kbb to know dealer’s prices but forget to ponder, how some dealers are selling same model at lower prices and some are selling it on an expensive price and still are managing to stay in business. This article will give you an insight about window stickers, mainly about what you see and what you miss on it.

What you observe on the window sticker

Manufacturer’s Suggested Retail Price (MSRP):

A basic/retail price without any other options, fees and destination charges, simply because it is the “suggested” price and it is up to dealers to either sell them expensive or cheap.

Optional features:

These are the optional features/packages you pay for. At times, you get no-charge choice, usually for paint, transmission and interior. Don’t forget that these prices are not fixed and can be negotiated.

Destination charges:

These are the charges for transporting vehicle from manufacturers to dealers. This is a non-negotiable fee and is same for a brand having different models and is independent of the shipping distance.

Market regulation:

At times, window stickers having a line or an extra sticker with them, adding additional charges to the original price. Usually dealers tack on this fee in order to make extra bucks over the models in demand. As dealers are in better position in this case so they won’t show any interest in you if you would like to bargain with them.

Sticker price:

Sticker price include total price for the car, having all charges like market adjustments, MSRP, additional selected options and destination charges. Usually salespersons try to sell on this price or offer a manufacturer discount or token discount. Somehow, it is better to start negotiating from the dealer’s true cost (explained below) than from the sticker or token price.

Things you don’t observe:

Dealer’s invoice price:

It is a price printed by the manufacturers on the dealer’s invoice, but this is not essentially the price paid by the dealer for the vehicle. Usually dealer’s profit range increases with hidden bonuses like incentives or holdbacks. Getting knowledge of invoice can save your hundreds of bucks.

Rebate:

It is a direct-to-buyer incentive from the manufacturing company. Don’t consider bargaining on this price as this is direct from the vehicle manufacturers. Rebate always remain the same no matter how much you pay for the car.

Dealer’s incentives:

It is the amount paid by the manufacturers to the dealers in order to sale, not too much desired, models. Dealers either keep this money as profit or leave it so to give additional price cut off to the customers. This make them sell a vehicle at “their cost” or even below. These schemes are short-living and are not for public announcements.

Holdbacks:

A lot of manufacturers give offers to dealers like, some percentage of invoice prices, MSRP, as a warranty upon sale of the car. Usually such holdbacks are from 2-3%, which give dealers a chance to make profit (even without dealer(s) incentive), on a car traded on a price of “invoice.”

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