A new car's price is a stack. The manufacturer sets a base price, options and the destination charge are added to reach the sticker total, and the invoice price sits below that. The dealer's real cost sits lower again. What you actually pay is the negotiated selling price plus taxes, registration, dealer fees and any add-ons: the out-the-door price.
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What are the layers of a new car price?
2. Options and destination make the sticker total
The window sticker adds the suggested price of each option and the charge for shipping the car to the dealer, then shows the total. Federal law requires all of these on the label.
Source: 3
3. Invoice sits below the sticker
The invoice price is the manufacturer's initial charge to the dealer, and it is lower than the MSRP.
Source: 1
4. The dealer's real cost sits below invoice
Holdbacks, incentives and rebates from the manufacturer lower the dealer's final cost under invoice. You will not see that number.
5. The selling price is where you negotiate
The vehicle price is negotiable, along with the interest rate and your trade-in. Shopping several dealers is how you find out where your price should land.
Source: 5
One car, five prices
Round numbers for illustration only. They are not the price of any real vehicle, and real taxes and fees depend on your state.
The five prices to know
- MSRP: the sticker total
- Invoice price: the manufacturer's charge to the dealer
- Market price: what the same car is selling for near you
- Dealer fees and add-ons: charges added to the selling price
- Out-the-door price: the total you will actually pay
Sources
- New York State Attorney General, Buying a car?
- New York State Attorney General, Advertising guidelines for automobile dealers
- 15 U.S.C. 1232, Automobile Information Disclosure Act (window sticker)
- FTC, Car Dealer Ads and Promotions: Know Before You Go (July 2022)
- CFPB, What factors into the price of a car or vehicle? (last reviewed September 12, 2023)
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