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Using the Internet to Buy a Car (Part 1) - Price

Using the Internet to Buy a Car (Part 1)

Today we'll focus on price, one of the most important issues in buying a car.
The best place to find out the true cost of a car to a delaer is (  In addition to prices, you can learn a lot about a cars features on Edmunds.  MSN also has a great website to compare car features (

As useful as Edmonds is, I highly recommend using a car buying service. 

TRUE STORY:  I used Autobytel to buy a Honda Accord several years ago for my wife.  The car was stolen and stripped (twice) 6 months later.  The second time it was declared a total loss, and our insurance company paid us $1000 more than we paid for the car using Autobytel. 

Car buying services work best for cars that are not in very very high demand and for which there is a low supply.  For example, last year people were paying over sticker price for PT Cruisers.  No Internet car buying service would have helped you get a reasonable price.  But if you want a car like an Accord or a Dodge Caravan which are in plentiful supply, you can get a great deal from a car buying service. 


Dealer invoices have up to two to three percent holdback that is usually reserved for fleet customers. The general public is not aware of this inflation.  Also, manufacturers offer rebates and delivery allowances in the range of a few hundred to thousands of dollars that is supposed to come off the price - this is hidden in the invoice.
Combining the hidden holdback with many rebates offered by the manufacturer, there can often times be a difference of $2000 or $3000 between the invoice price and actual dealer cost. If you purchase a vehicle at invoice prices - with a $3000 difference - the dealer makes $3000 on the vehicle. Many dealers will easily settle for a $1500 to $2500 profit. If they do, and you purchase the vehicle correctly, you will be well below dealer invoice.
Your awareness of these hidden savings combined with using the right online "car pricing services" can put this money into your pocket - not theirs. Car pricing services offer free price quotes from their vast network of trained dealers.

Here is a list of qualities a good car pricing service should have:
  • Good online pricing services are free of charge.
  • Good online pricing services bypass the salesman completely - You don't have to worry about scams, selling systems or annoying phone calls
  • They provide you with dealer invoice prices and incentives ahead of time - You can easily figure out the true dealer cost of a vehicle by using the formula below - Knowledge is power.

With the cost of a vehicle you know where you stand. You can then figure out what a dealer is making on your sale. Dealers using online pricing services know you have this information and provide quotes accordingly - usually in the fleet pricing area.

How to Leverage Pricing Services to Save Money:

To leverage this system in order to maximize your savings, you need to get as many quotes from competing online pricing services as possible. Dealers will compete for your business based on price and not sales pressure. The best pricing services deal with fleet managers or Internet managers. They don't make money on overall profit but on sales volume, and they are happy to offer you the lowest price to get your business.

Leveraging online pricing services offers the best buying situation possible for the consumer who hates car shopping. Fill out a few forms and in minutes you are on your way to savings that would take the best negotiators weeks of hard work to achieve. But you have to be careful - not all pricing services are the same. Some let salespeople try to pressure you to visit the dealership without giving you a quote upfront. If you want to avoid this get prices from InvoiceDealers, Autobytel, Stoneage, and CarsDirect. These services use trained dealers that are used to dealing with an informed Internet public.  These sources all offer excellence customer service and low prices.

InvoiceDealers, Autobytel, Stoneage, and CarsDirect offer the following benefits:
  • One: You pay absolutely nothing for the service! It's Free.
  • Two: You deal with a Fleet or Internet manager - no pressured sales.
  • Three: They offer all information necessary to make an informed decision: Invoice prices, rebates and incentives, a break down of options and their cost. (Needed to calculate true dealer cost)
  • Four: Offer quick turnaround time. You will often receive quotes the first day - sometimes in less than an hour!
  • Five: When it's time to take delivery you simply pay and drive off in the car you want at the price you want - they won't switch you to another vehicle at a higher price.
Many similar services on the Internet charge up to three hundred dollars for this service and promise you invoice pricing. You know that the invoice price has hold back and rebates that need to come off. Paying for invoice pricing is like paying a fee to get ripped off.

Side Note:
Actually, there are hundreds of price quote services but 99% of them simply sell your information to the highest bidder. (Many to multiple sources!) InvoiceDealers, Autobytel, Stoneage, and CarsDirect will protect your privacy - and offer good hassle-free shopping.

How to get started - Determine True Dealer Cost...

The first thing you have to do is visit InvoiceDealers, Autobytel, Stoneage, and CarsDirect and fill in your information, the car you want and the equipment. As you are doing so you will receive the MSRP and Dealer Invoice prices for the car and chosen options. You will also receive the current rebate that you are entitled to. Copy this information down. When you are finished completing the quote process you will be able to figure out dealer cost using the following formula:
  • Dealer Invoice + Destination Charge + Options - Holdback = True Dealer Cost
  • True Dealer Cost + taxes/Licensing - Rebate = Your on the road price.

Here is an example:

To keep it simple the destination charge and options are left out...

Invoice price: $20,000
Holdback: $700
Rebate: $3000
Note that the prices above do not reflect a real vehicle - they are simply examples to help illustrate the formula.

$20,000 - $700 = $19,300 dealer cost. If you buy this vehicle for $19,300, you just made a purchase at dealer cost ($700 below invoice). The dealer made $3,000 because they kept the rebate as profit.

Many dealers are willing to make much less profit than $3000. If the vehicle is in high supply with a good rebate you may do much better than the example above. Get price quotes from InvoiceDealers, Autobytel, Stoneage, and CarsDirect.
Wait for your price quotes and see who is the lowest. You will know how much they are making on the car and have a great price - usually below invoice.

Why this works...
  • Dealers in these networks know that you will be getting competing quotes - they have to compete based on price.
  • Dealers also know that you are an informed Internet shopper and you are armed with this information - they will price a vehicle accordingly.
  • Perhaps the most important item is the rebate. If a rebate is $2000 and you buy a vehicle for $100 below invoice, the dealer still makes good money and you received a great price.

NOTE: Please note that in some cases you are only entitled to rebates if you do not choose the advertised low financing percentage from the manufacturer. In other words you can't have both. Again this varies with the vehicle, time of year and location. Getting quotes from InvoiceDealers, Autobytel, Stoneage, and CarsDirect will provide you with the necessary information regarding rebates.


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