What to Pay Over Invoice for New Car

The Internet makes it simple to find a car's invoice price with a few mouse clicks. This increases your negotiatiing power. The dealer usually pays less than invoice to the manufacturer. You can get a good deal if you know how to calculate the real cost and buy your car at the right time of the year. Sometimes you'll pay more than the invoice price, but you can often get a car at or below-invoice if you're a sharp shopper.

Calculate the True Cost

A new car invoice does not reflect the true cost of the car for the dealer. You could pay the invoice price and he would most likely still make money, thanks to a concept called a "holdback." This is money that is paid back to the dealer by the manufacturer. SafeCarGuide.com says the holdback commonly it runs from 1 to 3 percent of the invoice price. Some manufacturers who do not give a holdback, but they are mainly luxury car makers. Manufacturers may also give factory-to-dealer incentives. These are similar to rebates, but they are not publicly advertised and the money goes to the dealership rather than the consumer. You can find holdbacks and incentives online at websites such as Edmunds.com.

Dealers won't want to share their holdback, and they may be reluctant to give you any of the incentive money. However, you can remind them of these two items if you offer to pay invoice and they try to claim they won't make a profit.

Determine the Demand

You can often get low-demand cars for invoice price. Sometimes, you will pay even less if there are high factory-to-dealer incentives. On the flip side, popular cars will go well over invoice. LeaseGuide.com says a car model may even sell for more than the manufacturer's suggested retail price if there is a shortage of available vehicles. Don't expect to get a good price on this sort of vehicle, and don't bother to start with the invoice price when negotiating.

Use Smart Timing

You are more likely to get a car at the invoice price, or just above it, if you use smart timing. The best time for car shopping is around Christmas, when most people are spending money on gifts instead of new vehicles. Right after the holiday, consumers are still reluctant to buy big-ticket items because they are still paying off holiday bills, while car dealers are anxious to sell because they may be trying to make end-of-the-year quotas. A car salesperson will be ready to deal, so start your negotiation at or just below invoice.

SafeCarGuide.com says the end of the model year is a good time to get an invoice deal because dealers are trying to make room for new models. You can also try offering invoice at the end of any month; the salesperson may be trying to get an incentive for reaching a certain sales level.