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How to Determine New Car Price


How to determine a New Car Price.

When I am shopping for a new car, I use the following formula to determine the price I will pay
for a new car. It’s a formula that I have used many times in the past few years and almost always results in the best deal.

Invoice Price
- Rebates

True Dealer Cost

True Dealer Cost
x 1.04
Your Rock Bottom Price

this page, it contains valuable links you will need
in your car buying journey.

Step 2:
Research invoice price at Invoice Dealers Make sure you add the invoice costs of all options you are
looking for to get true invoice

Step 3:
Search for dealer to customer rebates, and manufacturer to dealer rebates. Add these two numbers together to get your total rebate. Most cars will not have a manufacturer to dealer rebate, so don’t worry if you don’t find one.

Subtract the total rebate found in step 3 from the invoice price calculated in step 2 and you have true dealer cost.

Multiply the true dealer cost by 1.04 to get your bottom line price. This is 4% profit for the dealer, and is more than fair.

Step 6: Get a new car price quote and start negotiating with the dealer on your terms. I have had dealers offer me less than my bottom line, so when you fill out the Form, don’t let them know what you are willing to pay ! This quote is not binding, and you will not get spammed. I have included a link below to start your price quote. If you are comparing vehicles, make sure you submit multiple quotes !

E-mail me if you have any questions.

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Posted: 9th July 2006  |  Author: Kevin Schappell  |  Category: Buying A Car

3 Responses to “How to Determine New Car Price”

  1. john.mather says:

    Unfortunately, the notion of 4% being “more than fair” does not allow for the costs associated with keeping an inventory of product for consumers to have the choices they do when they shop. The costs of holding inventory include interest, insurance, maintenance (cleaning) and continue on to include other things like dead batteries, key management, and personnel expense to order and manage the inventory. If these costs were not borne by the dealer, yes, 4% would be more than fair, but let me know the next time you go to any other retailer and tell them that 4% is all you’ll allow them in markup.

  2. kevin says:

    I have purchased several vehicles at 4% over invoice or even less. The dealer knows I will be in for service and has plenty of other customers that will pay sticker price. I have talked with several dealers in the Eastern PA area that are willing to sell their vehicles at invoice to make money down the road on service and other add-ons. It’s called lifetime value of a customer, they know it and are willing to sell at a lower price.

  3. john.mather says:

    Thats fine, and I’m glad you are happy with the purchase price, and that you continue to support your retailer, assuming that you do. Many times, vehicles are sold much, much less than invoice; it all depends on the vehicle, how many the dealer has, and how long it has been in inventory. The dealer that has had a unit on his lot for 6 months with no consumer interest will be willing to get it out of his inventory, even if it is at a loss. This happens every day, although more often with used cars. The only point I had to make was that nobody should dictate what any retailer should be able to profit. For every loss, there is an offsetting gain, or they go out of business. I would also mention that it has been my experience that the “shrewd” buyer is not typically a dealership service customer, just a price shopper, who gets his oil changed by barely trained people because it’s cheap. Same goes for all the other stuff. No value is placed on the individuals who have invested in the tools and training to be true professionals.

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