The MSRP Price
Nov 15, 2009 More Saving
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MSRP stands for “Manufacturers Suggested Retail Price.” It originated from laws enacted to protect consumers and small businesses. Before MSRP, dealerships were free to charge whatever prices they wanted and the unsuspecting car shopper had no idea what the car was really worth.
…So it would be hard to negotiate a dealer down in price when you didn’t have any idea of what a car actually costs.
But where is the MSRP price? It’s the actual sticker price! But let’s go over some car dealer terms to clarify things a bit:
The MSRP price is the sticker price. The Invoice price is the price the dealer (supposedly) paid for the car to the manufacturer. Holdback is Factory to Dealer Rebates. A good rule of thumb is you should start your haggling about $2000 below the invoice price.
Dealerships used to place the MSRP price of each new car on a big sticker on the windshield to advertise to passing traffic. This practice has been mostly replaced with a spec sheet on a side window that lists the MSRP price.
But the MSRP price is not on all of the spec sheets: Some dealers leave it off the spec sheet on purpose of car models that are in high demand, hoping to negotiate the best price possible. Because if they did put the MSRP on the high-demand cars, potential car buyers might immediately expect to pay less than the price the dealership knows the market will bear.
…And if a buyer asks for the MSRP, the dealer can talk about it along with various “extras” the vehicle has. This way the dealer can start the negotiations from a higher starting price.
The MSRP price of a vehicle does not include registration, taxes, destination charges, and other miscellaneous fees and charges. Most people expect to get a discount off the MSRP, but when all the extra fees are added, the final price may be higher that the MSRP price. In fact, dealers used to inflate the MSRP artificially high so that they could offer you a big “discount,” making you think you were getting a great deal.
The trend has been to set the MSRP closer to the actual real market value, however. Dealerships have been under increasing pressure to not inflate it. But the result is that often you will pay a price higher than the MSRP, once the added extra charges are added in.
So the MSRP is your friend. It allows you to start off at the same negotiating point as everyone else, no matter where you live. The MSRP puts everyone on the same playing field, while still allowing for free market trade.
Before laying down your hard-earned money on a new car, discover these money-saving tips on the MSRP price. Know your rights and options!
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Tags: automotive, autos, Buying A New Car, car buying, car buying tips, Car Dealers, cars, cars for sale, How to Buy a New Car, how to purchase a new car, invoice prices, More Saving, MSRP prices, new car reviews
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