The new car buying process can be an exhausting and difficult process. Many have had the experience of going into a dealership and simply not knowing whether the salesperson was being honest with them when they presented their figures. Or, if they were being charged with hidden dealer fees that were not mandatory.
The thing is, it’s difficult to effectively negotiate without knowing some basic information about the vehicle you are looking to purchase. This is why having a “Dealer Invoice Price Report” is so important. What a Dealer Invoice Price report does, is make you aware of the price the dealer paid for the car, as well as inform you of any hidden rebates that the manufacturer may be offering directly to you.
“Manufacturers quite often will offer discounts directly to customers for a variety of different reasons,” says R. James Matthews, President & CEO, Armada Data, parent company of CarCostCanada. “Common rebate programs include discounts for: cash buyers, recent graduates, military members, loyalty customers etc. The difficulty is that dealers will often times not advertise all of these incentives effectively. Knowing this information before walking into the dealership is absolutely critical. Without it, you could possibly be leaving savings on the table you didn’t realize you qualified for.”
The next step is to understand what an appropriate markup is for a new car sold in Canada. Generally speaking, most new vehicles can be purchased for a markup of 3% over the dealer’s dead-cost (The dealer cost once you have subtracted all of the rebates you qualify for). Keep in mind that the Manufacturer’s Suggest Retail Price (MSRP) usually represents about a six to eight percent markup over the dealer’s cost.
To sum it up, if you follow these four steps, you will get the best price on your new car:
- Obtain a Dealer Invoice Price Report using an online third-party service
- Determine what incentives/rebates you qualify for and subtract them from the Invoice Price
- Add back an appropriate dealer markup of roughly three percent
- Contact a trusted dealer in your area.
After following these steps, you should have a very good idea of what you should be paying for your next new vehicle. The Final step is to contact a trusted dealer in your area to complete your purchase. It is always a good idea to check a dealer rating service to find a trusted and well-reviewed dealer in your area. Once you have found such a dealer, it is best to speak with a senior member of the dealership, such as a Sales Manager or Fleet Manager. They will be authorized to provide you with the Best Price right away and pass on all available rebates to you with little to no hassle.