\n\n\n\n\n\n
A 2014 survey by Edmunds found that people consider shopping for a car more stressful than planning a wedding. More recent studies show consumers would rather be stuck in an elevator than spend an afternoon in a car dealership. The stress consumers feel can be caused by the different “unknowns” in the car buying process.<\/p>\n\n\n\n
Below, we will cover some common terms and phrases you will likely hear or see when shopping for a new vehicle. Understanding what they mean and how they are used will help as you search for a new car. <\/p>\n\n\n\n
Manufacturer’s Suggested Retail Price<\/h2>\n\n\n\n
Commonly shortened to \u201cMSRP,\u201d this number is found near the bottom of the window sticker (it might appear in a bolded or highlighted box). The MSRP includes the standard vehicle price (i.e., without options), the pricing of optional features and packages, and the destination and handling fee. It does not<\/strong> include factory rebates or other incentives.<\/p>\n\n\n\n Dealers can sell vehicles at or above the MSRP, though it is rare (and some manufacturers will even warn dealers against doing so). Muscle cars, like the Shelby Mustang and specific versions of the Dodge Challenger, may fall into this category. <\/p>\n\n\n\n MSRP is used interchangeably with phrases like \u201cretail price\u201d or \u201csticker price.\u201d You can negotiate from the manufacturer\u2019s suggested retail price, though it is not always the best course of action<\/a>. Obtaining the invoice price is sometimes thought to be a better strategy.<\/p>\n\n\n\n Invoice prices are the amount the dealer pays for the vehicle. It\u2019s sometimes called \u201cdealer cost\u201d in the car business. When an automaker ships a new car from the factory to the lot, the dealer is given a bill (or an invoice). The invoice price generally represents the lowest possible number as a starting point for negotiations during the car buying process.<\/p>\n\n\n\n If you can see what the dealer paid, you can \u201cnegotiate up\u201d from the invoice price rather than \u201cnegotiate down\u201d from the MSRP or sticker price. If you can obtain the invoice price or dealer cost as a starting point, you may find it helpful as you negotiate.<\/p>\n\n\n\n Generally speaking, if a sales consultant is paid on the gross amount of each individual vehicle they sell, there is more incentive for them to keep you near the MSRP for a more significant profit margin. By doing so, they will make a higher commission. This is partly why car buying can feel like a battle, as consumers and the dealership are immediately pitted against each other. <\/p>\n\n\n\n If the dealer shows you the invoice price, you may feel the ball is more in your court when you negotiate. However, since there is no guarantee a dealer will reveal what they paid for a vehicle, doing thorough research is still your best bet. <\/p>\n\n\n\n Every customer is entitled to the current factory rebates, which the dealer subtracts from the MSRP. Rebates come in all shapes and sizes, so it\u2019s best to check the manufacturer\u2019s website for the most current incentives. You may also qualify for other rebates, like military service, college student\/recent grad, or if you are a first responder.<\/p>\n\n\n\n Conquest rebates are also popular and include extra money if you switch brands via trade-in (like trading in a Ford for a new Chevy, a Toyota for a Honda, a Mercedes-Benz for a BMW, and so on).<\/p>\n\n\n\n A common misconception is that dealers somehow lose money by applying rebates, which isn\u2019t true. The automaker guarantees rebates, so double-check to ensure you get the correct amount taken off the purchase price. Some dealerships will even have a giant marker board in the showroom outlining the current rebates and incentives.<\/p>\n\n\n\n Factory rebates can and do vary by region, so it might be tempting to search farther from your home. However, you usually have to take the rebates that apply to where the new car will be registered (i.e. where you live), not where it’s purchased. <\/p>\n\n\n\n If you plan to search farther from home for a new vehicle, visit the manufacturer’s website and enter a zip code to see their current rebates for that region.<\/p>\n\n\n\n For example, here in Detroit, Michigan, as of October 2023, a new Ford F-150 is eligible for 3.9 percent APR for 60 months through Ford Credit with up to $3,000 in additional rebate money. The Omaha metro in Nebraska, by contrast, has the same financing offer but with $3,250 in extra rebate money. <\/p>\n\n\n\n In Houston, Texas, the same financing offer is available through Ford Credit, though residents in that area receive less bonus and customer cash than those in Detroit and Omaha (if we check these rebates again in the near future, there is a good chance they will be different). <\/p>\n\n\n\n Getting a better price at a dealership further away from home will have less to do with a factory rebate and more to do with how they operate as an independent business. Some dealers might offer a little extra discount if you are traveling from out of state to buy a vehicle, especially if it’s been sitting on their lot for a few months. If you are willing to take it, they might be more generous with the discounts.<\/p>\n\n\n\n This is an acronym for Finance and Insurance, but it’s less of a term and more of a separate process. Internally, this is sometimes known as the “hand-off” phase of the deal. It means the sales consultant has sold the car; now it’s time for another staff member to take over.<\/p>\n\n\n\n Those staff members are F&I managers, and they are responsible for this part of the transaction. F&I managers handle the credit apps if you are financing and help you sign all of the paperwork at the end.<\/p>\n\n\n\n F&I managers will likely present you with optional \u201cadd-ons.\u201d This can include window tint, rear-seat entertainment systems, fabric protection, window etching, and various other accessories, like a tonneau cover<\/a> if you are purchasing a truck. <\/p>\n\n\n\n Truck accessories are one thing, as there is usually an element of styling and functionality, but otherwise, very few add-ons<\/a> presented at the dealership are essential (you can avoid things like \u201crust proofing\u201d the undercarriage, for example). <\/p>\n\n\n\n If you opt for additional accessories or add-ons, consider paying for them in cash. During the F&I process, there is a natural assumption that everything will go into the loan unless you say otherwise. If you want a few extra accessories for your new vehicle, there is nothing wrong with that, but don\u2019t pay for them over the next 60 months with interest.\u00a0<\/p>\n\n\n What Is The Invoice Price? <\/h2>\n\n\n\n
![\"Sales](\"https:\/\/www.automoblog.com\/wp-content\/uploads\/2020\/04\/Car-Dealership-2-1024x684.jpg\")
<\/a>Why The Invoice Price Is Important <\/h2>\n\n\n\n
Factory Rebates<\/h2>\n\n\n\n
![\"Car](\"https:\/\/www.automoblog.com\/wp-content\/uploads\/2020\/12\/Car-Dealership-3-1-1024x684.jpg\")
<\/a><\/figure>\n\n\n\nCan I Get a Better Rebate at Another Dealer? <\/h2>\n\n\n\n
![\"Car](\"https:\/\/www.automoblog.com\/wp-content\/uploads\/2020\/12\/Car-Dealership-4-1024x684.jpg\")
<\/a><\/figure>\n\n\n\nWhat Does F&I Mean? <\/h2>\n\n\n\n
Going Through The F&I Process <\/h2>\n\n\n\n
![\"Endurance\"](\"https:\/\/www.automoblog.com\/wp-content\/uploads\/2022\/04\/END-Endurance-Logo-2021-F.png\"){kind=logo}