As experiences go, purchasing a new car is one of those that can either be exciting or maddeningly frustrating. Understanding what those numbers on your new car's window represent can help to ease some of the potential aggravation.
Dealers
Car dealers work like any other business; buy low and sell high is the name of the game. Through arrangement with the factory, new car dealers receive a discount on the merchandise, called wholesale.
Invoice Price
As the name suggests, invoice price is what the dealer had to pay the manufacturer for the car.
Profit Margin
Dealers cannot dell a car at wholesale and make money, which is why the factory sets a "suggested" retail price called the manufacturer's suggested retail price. The difference between invoice price and MSRP is the dealer's potential profit margin.
Invoice Variations
The invoice amount is determined by the factory cost of the car, which includes base cost and all additional options.
The "Big Buy" Lie
Don't believe those car salesmen who claim to have gotten a "factory discount" for selling vehicles in bulk. All dealers large and small pay the same wholesale (invoice) price for their cars.
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