Car Buying Tips Dealer Holdback

For the most part if you`ve done any research on car buying and have researched the car that you are looking to buy, then you have a pretty good idea of what the invoice cost on the car is.

The vast majority of people that buy cars think that dealer invoice is what the dealer pays for their cars. However, there are other factors that go into exactly what the dealer has to pay for their cars.

Car Dealer

The first factor is one that is called holdback. Holdback is simply a small amount of money (usually 2% to 3%) of the suggested retail price minus any shipping charges which is held back by the manufacturer. Usually the dealer gets this money back every quarter based on each of the cars they have sold during that time.

Let`s say for example that a car on a dealer`s lot has a MSRP of ,000. If the manufacturer of that vehicle as a 3% holdback, then the actual cash held back on the vehicle would be 0. keep in mind that the amount of holdback varies from manufacturer to manufacturer.

So to get even closer to the dealer invoice cost of a car, you will want to take the invoice price that you have researched and subtract the holdback from that number.

Keep in mind however that for car dealers holdback is somewhat of a sacred cow. Meaning that they consider that holdback money their money and nobody else`s. And most dealers don`t consider the holdback money as being negotiable as part of putting the deal together. But, having said that, you should know that when it comes to putting the deal together everything is negotiable.

Holdback actually started many years ago as a way for the manufacturers to help ensure that the dealers had money every quarter to pay such things as revenue taxes that would come due as a part of doing business. Today however, holdback has turned into a pretty decent profit center for the car dealers on each of their units.

So, keep in mind that even though getting at the dealers holdback may be somewhat difficult; keep in mind with a little hard work and the right timing you could shave off a few hundred more dollars off of what you`ll pay for your next car.

Car Buying Tips – Dealer Holdback

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