There seems to be some confusion about the terms used on this site when we're talking about purchasing a new vehicle. Let me clarify a few:

1) MSRP: for Manufacturer's Suggested Retail Price. Also referred to as list price, sticker price, retail price, etc... This is the price posted on the window of every new vehicle AT THE FACTORY. As its name implies, it's a "suggested" price for a dealer to sell the vehicle for. The Monroni law (around since the late 50's) requires this sticker to be put on every new vehicle before it leaves the plant. IT CANNOT BE REMOVED BEFORE THE VEHICLE IS PURCHASED! If you come across a dealer that has removed this sticker from their vehicles, call your state Attorney General or call me- the dealer can be heavily fined or put out of business, and deserve whatever they get.

2) Invoice: this is what a dealer pays for a vehicle and its factory-installed options AS IT COMES OFF THE TRUCK. It is NOT, however, the final cost of the vehicle. Additionally, there are charges for regional advertising (listed as "FDAF Assessment"), and gasoline. The first is for group advertising among the dealers in your area ("see your Tri-County/ Bay Area/ Gulf Coast/ Houston Texas Longhorn Dealers Today!"), and the second is what the factory charges the dealer to put a certain amount of gas in at the factory. Then, about 60 days after the vehicle is sold to a consumer, the dealer will receive their "holdback" money. This is an amount equal to 3% of the MSRP, not including freight. So, dealer cost is invoice plus advertising plus gas, less the 3% holdback. There are other charges and credits, but they vary from area to area, and dealer to dealer, so they're hard to figure in. These charges/ credits are approximately 1% of the invoice.

Hope you all find this helpful. Tomorrow: Incentives

 

This is a long read,but well worth it,it can save you from getting shanked by the dealer.It also tells you about extended warranties.
www.carbuyingtips.com

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