How much below MSRP is a good deal?

How much below the MSRP can I offer to a dealership? I want to put in a good offer for my new car and get a great deal.

Answer
“Good for you for doing your research before buying a car!
It’s standard practice to offer 3-5% over your dealer’s true new car cost.
After you find the car you want to buy, take note of the:
  • MSRP (sticker price)
  • Factory invoice price
  • Dealer incentive (if you can find this)
You can calculate the true cost by using this formula: Factory Invoice Price – ( 3-5% of MSRP + Dealer Incentive) = True New Car Cost
Take the true new car cost then add 3-5% of the value to it. This value is what you should offer your dealer.
For example, the sticker price (MSRP) of your dream car is $40,000. The factory invoice price is $38,000. You then need to find 3% of the MSRP, which is $1,200. When you ask the dealer, you learn their incentive is $1,000.
Time to plug the values into the formula: $38,000 - ($1,200 + $1,000) = $35,800.
This means the true new cost is $35,800. You then add 3% of the true new cost to find the total offer, which looks like this:
$35,800 + $1,074 = $36,874
Your total offer should be around $36,874. Paying too much more than this will benefit the dealer more than you.
Once you and the dealer settle on a price and you get the keys to your new ride, don’t forget that you need to have car insurance. Lenders will require that financed vehicles have full coverage, which can be pricey.
But proper coverage doesn’t have to drain the bank. Try using the Jerry app to help you compare quotes from the top providers and get the best deals delivered to your phone in minutes for free.”
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Rachel Juillerat
Answered on Sep 10, 2021
Rachel Juillerat has her Master's in Publishing & Writing from Emerson College. You can view her work in the Independent, Cupid's Pulse, and the Penmen Review. She has worked in personal finance for five years before transitioning to insurance. She lives in Boston, where she spends her time exploring small New England towns, learning new skills, and napping through her cat's zoomies.
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