- Factory Invoice. What the Dealer pays the Factory for the vehicle, minus any "hold-back" that the Dealer gets from the factory for taking delivery of the car.
-Dealer Invoice. What the Dealer has paid for the vehicle plus any "upgrades" or "add-on's" to the car that were performed at the factory, or after the dealer received the car and had third-party add-on's put on the vehicle, typically from a local shop/provider.
- Customer Invoice. That'll be the deal your daughter actually signs to buy the vehicle. Customer Invoice is the document she signs agreeing to the price, which is then used to generate the Sales Contract.
99 times out of 100, you will never see the Factory Invoice. You'll see the Dealer Invoice, which has already included their built-in profit from the factory.
If you want the best deal on a car, here's what you do:
- Ask which vehicles of the type your daughter is looking for have come in during the last week.
- Look at those cars, choose one.
Any car that's arrived in the dealer in the last week has likely not yet been financed by the dealer's bank. That means they haven't had to include it in their "floor plan." The "floor plan" simply stated are all the cars on the dealer's lot that are financed by the dealer's bank, and includes any insurance required to protect the vehicle in case of loss (theft) or damage (hail storm, vandalism, etc..) as well as any "prep" and advertising charges. Prep is simply removing the plastic bumper covers, putting in floormats, checking fluids, etc.. The dealer also has to pay to advertise the car for sale, insure it while on the lot, etc..
By finding a car on the lot a week old or less, the Dealer hasn't incurred floor-plan finance charges with their bank yet, and you don't want to pay for those charges.
You also don't want to pay any of the dealer incurred cost of insuring, advertising, maintaining the vehicle since it's been on their lot since they haven't incurred those charges on a week old car.
In fact, what you can do is negotiate those charges OUT of the sales price AND negotiate part of the hold-back away from the dealer, and into your pocket. (There are websites you can find that information.)
On an average car, the Dealer's "hold-back" from the factory is anywhere from $250 - $1500 or higher, depending on the car. On lower model cars, hold-back is pretty low. On more expensive models, the hold-back can be $1500 or higher.
By finding a vehicle that suits your needs that's been on the dealer's lot a week or less, and armed with the cost of options, dealer hold-back amounts and the fees the dealer pays for keeping a car on the lot you can negotiate yourself a very good deal, typically within the hold-back the Dealer gets from the factory.
I'll also tell you that a new car is the WORST thing you can buy, financially speaking. The second you drive it off the lot it loses 1/3 of it's value to you. Your absolute best deals in buying cars is to find a 2-3 year old model with low to medium mileage on it as someone else has already taken that 1/3 depreciation hit. Used cars typically are not as risky to buy as they were in the 80's, 90's or early 2000's. The quality on cars is up dramatically, and its easy to tell a well maintained vehicle from a poorly maintained one if you know what to look for.
For myself, I always buy something 3 years old since I drive 8 miles/day. If it breaks down, the wife can come and get me. She gets the new vehicle since she's the one carting the kids around all the time. That's just personal preference.
I bought 1 ‘brand new’ car with something like 18 miles on the odometer. Most of the others I have bought have been ‘program’ cars. They are typically same year or last year, low mileage (under 20k).
The last one I bought was a 2007 Jeep. It still has a ‘resale’ value more than what I paid for it, because used car prices have actually risen (remember Obama’s Cash-for-Clunkers? Most of those trade-ins were supposedly scrapped).
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Even with 1-2 year old used cars, check the CarFax. I saw one vehicle locally a few years ago. I noticed it kept showing up on a local sales lot. I checked the CarFax and it was showed it had had 6 owners. I assumed the vehicle had problems and kept being traded in on other vehicles.
By finding a car on the lot a week old or less, the Dealer hasn't incurred floor-plan finance charges with their bank yet, and you don't want to pay for those charges.
I disagree. The opposite is true I worked as a banker setting up and servicing floor plans for several years and I know the longer a vehicle has been in dealer inventory - and the more interest paid on the floor plan - the more anxious the dealer is to sell it and cut his expenses.
I'll also tell you that a new car is the WORST thing you can buy, financially speaking. The second you drive it off the lot it loses 1/3 of it's value to you. Your absolute best deals in buying cars is to find a 2-3 year old model with low to medium mileage on it as someone else has already taken that 1/3 depreciation hit.
Also untrue. You will lose money buying a new car only if you SELL it the second you drive it off the lot. Of course the same is true if you buy a used car and sell it immediately also. But no one does this
I disagree with that because most people buying a new car are going to be holding on to it for a number of years. A car is not meant to be an investment (unless you are collecting antiques) so it is irrelevant how much "value" it loses when you drive it off the lot.
Buying a used car might be cheaper up front but it carries the risk of major repairs because you will never know how the previous owner maintained it. Plus, unless the previous owner was a neat freak, you are going to be dealing with somebody else's food crumbs in every nook and cranny, stains on the interior carpets, etc. Most people are slobs when it comes to their cars. I absolutely forbid anybody to eat food in my car and get it professionally detailed every spring so it keeps looking brand new year after year.