| The new car sales process has a language all it's own, | | | | supposedly listing what the dealer actually pays for the |
| and terms are frequently used that many don't fully | | | | vehicle at wholesale cost. However, it is rarely the |
| understand. By not understanding the meaning of | | | | actual cost of the vehicle itself due to other incentives |
| some of these terms, buyers are kept in the dark and | | | | listed below. If a dealer shows you his factory invoice |
| spend more than they should. So let's review some of | | | | and claims that is what he paid for the car, it's often |
| the new car buying terminology and what it really | | | | not the case. |
| means. | | | | * Rebate - A discount given to any buyer of a |
| * Manufacturer's Suggested Retail Price (MSRP) - This | | | | particular vehicle by the manufacturer. Remember that |
| is found on the new car window sticker and is for | | | | it comes from the manufacturer, not the dealer, so it |
| many practical car buying purposes, useless to the | | | | does not affect what the dealer actually paid for that |
| consumer. It is, as the name says, only a "suggested" | | | | vehicle., or the price that you negotiate with them. |
| retail price. The dealer can sell that vehicle for more or | | | | * Dealer Incentives - This is money that the |
| less than that figure at any time. | | | | manufacturer pays the dealer for selling certain |
| * Optional equipment. This is also listed on the window | | | | vehicles, especially those that are slow movers. This is |
| sticker and details what options are installed on this | | | | not announced to the public, but is often listed on some |
| vehicle and how much they cost at retail, if anything. | | | | car sales websites online and in Consumer Reports. It's |
| * Destination charge. Basically this is a shipping charge | | | | good to keep up on these incentives as they provide |
| to get the vehicle from the manufacturer to the dealer | | | | more information on what a dealers is actually paying |
| and is not an amount that can be negotiated. | | | | for a particular vehicle. |
| * Addendum sticker - This an added sticker that is | | | | * Dealer Holdback - This an amount that is usually |
| often placed to the side of the manufacturer's sticker | | | | %2-3 of the MSRP that the manufacturer rebates to |
| that lists extra options or equipment that the dealer is | | | | the dealer for selling a vehicle, no matter what price |
| charging for above and beyond the MSRP or retail | | | | the dealer negotiates with you. Again, this is a way of |
| price. What you see on this sticker is completely | | | | the dealer making money even if he sells the vehicle to |
| negotiable and often contains highly inflated prices on | | | | you at Dealer Invoice. |
| items like rustproofing, fabric protectant, alarm systems, | | | | Knowing what all these terms mean and how they |
| and so forth. This is an area where you need to be a | | | | figure into buying a new car is important because they |
| savvy shopper and refuse to pay for exorbitant | | | | allow the buyer to establish the true wholesale cost |
| accessories. | | | | instead of negotiating higher figures that allow the |
| * Dealer Invoice - This is the invoice to the dealer | | | | dealer to make unreasonable profits. |