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When You Understand the MSRP on Cars You’ll See Why it’s Never the Price You Should Pay for a New Car

Dealer invoice price, factory invoice price, MSRP – these are all terms you’ll hear when you’re buying a new car; but how can you know which is the fair price to pay? In this article we’re going to explain the pricing terminology used in the automotive industry. When you know what the right price is, then you’ll know where to start your negotiations.

Between this information and by requesting a free, no obligation to buy new car price quote you’ll have everything you need to negotiate in confidence for the best possible deal on a new car.

With a click of your mouse you’ll receive competing price quotes and special internet incentives from Ashburn new car dealers, along with available manufacturer customer rebates and incentives.

  • A hassle-free/Haggle-free new car buying experience
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  • Low available monthly new car payments
  • Free, no obligation to buy new car price quotes

What Exactly is the MSRP on Cars?

Just like 7-11 or any other retail operation, new car dealers are provided with a suggested starting price for their product. In the case of a new car, that ‘suggestion’ is known as the MSRP or Manufacturer’s Suggested Retail Price. It tells the car dealership what the manufacturer feels is the cars highest retail value.

Actually the MSRP is fairly inconsequential, as car dealers hardly ever sell one of their new cars at the MSRP; well, that is unless someone who knows absolutely nothing about how retail works strolls onto their lot. Then it’s a big payday for the salesperson.

If a car salesman could make one wish it would be for a new car buyer to walk on the lot and pay the MSRP. This is why it’s so important for buyers to research and educate themselves before overpaying – a lot – for a new car.

In reality, the only reason there is an MSRP is because long ago one could drive to one new car dealership to buy a specific car at one price; then drive a few miles down the road to another dealership and see the exact same car, with all of the same bells and whistles at an outrageously different price.

The MSRP was created to install a level playing field and make the new car buying process fairer; providing accurate information on what the automaker had put into a car, along with a standardized ‘suggested price’ before a dealership jacked up the price.

What is Factored into the MSRP?

There are several things that make up the MSRP, let’s explore how it’s calculated:

  1. Invoice Price: This is the base cost of the car from the automaker to the car dealership. The invoice will include costs for all of the parts that make up a car, such as the gear shift, paint, seats, steering wheel, nuts & bolts – you get the idea; everything. It also includes labor costs along with the taxes the automaker incurred to build the car in its most basic, operable form, excluding any added factory options.

  2. Factory Installed Options: Essentially these are simply add on features to the basic car, like a high-end upgraded entertainment system, higher quality paint, leather seats, etc. Often, you’ll have the option to have these customizations made to your specs directly at the factory and it will arrive just the way you want.

  3. Destination/Transportation Charges: This is one charge that’s non-negotiable. Every car dealership has to pay to have the car shipped from the factory to their dealership.

  4. The Dealer Prep: This is the dealership’s cost to prepare the vehicle for sale once it has been delivered to their lot. This includes inspecting it, detailing, gas, etc.

  5. The Dealer “Holdback”: If you don’t remember anything else about the MSRP, remember the dealer holdback. This amount is added to the invoice price in the amount of either a percentage of the MSRP or invoice price (typically 2-3 percent). The manufacturer returns this percentage to the dealer at a pre-determined time (usually quarterly). While the dealership doesn’t have to pass on this profit to you, knowing about it can help substantially during negotiations. One dealership might lose sight of the big picture and be greedy, another very well may pass along some of that profit in order to make the sale (and receive their big bonus incentives/money)

This is why it’s so important not to contact just one new car dealership. When you request a free, no obligation to buy new car price quote you’ll receive competing price offers from multiple Ashburn new car dealerships.

By receiving numerous price quotes, along with available limited time only internet incentives and manufacturer rebate offers, you will be able to create a bidding war for your business.

Locate the Ashburn new car dealer who needs your business and will give you a great deal.


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New car dealerships are competing more fiercely than ever to gain your business. Request free competing price quotes from multiple pre-approved new car dealers. Lock-in the lowest available price in your area before visiting the dealership. Gain the negotiation tools you need to guarantee paying the lowest price, hassle-free.
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Car buyers equipped with pre-approved price quotes, dealer rebates and incentives are guaranteed to pay less. Know actual dealer cost, factory invoice price, and MSRP. Pay less than sticker price, deduct bonus cash rebates, secret dealer incentives, and special internet discounts. Informed new car buyers never need to haggle. Request free competing new car price quotes and uncover the savings today!