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For most people buying a car, any discussions regarding prices is where it starts to get nervewracking. Why? Simply because there is negotiation involved. For most of us, negotiation is not a fact of everyday life. Even for the most adept of negotiators, there is always the suspicion--and the fear--that they could have done a little better. This is why your preparation here is so crucially important!

The first place to start is to have a complete understanding of the components that make up new car pricing.
What is MSRP? Is the Dealer Invoice the net price that the dealer pays the factory for the vehicle? Holdback? What's that? How do factory to dealer incentives and rebates differ? To familiarize yourself with these terms, you can find a glossary of them here.

Online Sources of Car Prices

InvoiceDealers Since 1998, InvoiceDealers Certified Dealers have offered aggressive pricing and straightforward service to tens of thousands of car buyers who have used the InvoiceDealers system to buy their new vehicle quickly and conveniently.

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At Autos.com you select the car you want, your request will be sent instantly to the best matches in their dealer network who respond with their best price quote.

autobytel.com One of the original and best known of the price quote services, available in most areas of the U.S.

How Car Pricing Works

When it comes to cars, the reality of pricing is this: except for "no haggle" dealerships, everyone doesn't pay the same price. Car dealers are able to survive by getting some "maximum" deals (those that are close to or at full profit), some minimum deals (the minimum possible profit) and some deals in between. To save money, your goal must be to get the minimum possible deal. Leave the maximum and the in between deals for someone else. If you have spent the time to educate yourself in our "car buying school," you should reap the benefits! This being said, don't lull yourself into complacency by thinking the dealer will give you the minimum price just by asking for it. It's the worst mistake you can make!

Traditionally, car shoppers would go from dealer to dealer, asking "what is your best price?" They got frustrated and angry when they got the run-around from many of the dealers that they visited. What was wrong with this approach? The answer is simple. Pure psychology. A car salesperson earns his or her living by earning commission. They earn commission by selling cars. They sell cars, generally, by giving the best price. The problem occurs when a salesperson does give their best price to someone bouncing from dealer to dealer, only to have it beaten by another dealership by $25. They lose the sale and the commission and they vow never to let it happen again. From that point on, when a customer demands "best price," the salesperson puts on their best dancing shoes and the customer gets the classic runaround. No matter what anyone else tells you, running from dealer to dealer trying to have then give up their "best price" does nothing but guarantee frustration. No matter how adamant and insistent you are, these salespeople spend lots of time in training learning how to combat your price attack. Don't let your ego cost you money!


This is why the popularity of car buying services such as
AutoByTel, Autos.com and InvoiceDealers have blossomed on the Internet. The dealers who give you price quotes through these services figure that they are only going to have one shot at you, so the best way to get your business is to give you a rock bottom price. This doesn't guarantee the "perfect price" --nothing ever does--so you still need to compare it to the pricing information you have gathered. It does, however, take a lot of the time and aggravation (running around from dealer to dealer) out of the process. For more information, see our section on price quotes.


money saving hintDon't forget that the
financing and insuring of the car are a big parts of the total price. Getting a great deal on the price of the car and then giving it away in the Finance Office or to an Insurance Agent are mistakes that many car buyers make. Familiarizing yourself with your financing and insurance options before you start visiting dealerships can save both money and aggravation.

What if you still have to negotiate? See our discussion on price negotiation.

Next section: Financing

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