Re: "CASH BACK" -- What Does This Mean In Auto Sales Talk? Does The Buyer Receive Actual Wallet-Ready Bills -- Or Is "Cash Back" Just Code For Cost Reduction?

Let say they offer to sell you the car at $23,000 and you agree to apply
> $4,000 rebate to the sale. Your trade has an NADA wholesale value of > $10,000. He says I will give you $7,000 which is $3,000 under wholesale. > He shows you the invoice and says I must have $21,000 to pay for the new > car and you are only giving me $19,000 in cash and trade. I think you > will agree it if fair to make a $1,000 profit on a $27,500 car. You go > home happy because you saved $10,000. The dealership makes a gross > profit of $9,000. He then makes another $3,000, when he sell you car for > $13,000. Unless he takes another trade on your car for less than > wholesale, as well. Too cap it off, he will make another 1% to 2% off the > finance charges you will pay over four years ;)

And that is why the first thing you should ask the sales person is where is the invoice, then pay 10% or less than that. I haven't paid above or near invoice since 1989. With the kickbacks, MSRP and invoice are sucker plays.

Oh, they will hee and haw, but it is your money you save by preparing to walk.

I would not depend on the sales person to show you the actual invoice, this information is easily available on-line. If they are too eager to show you the invoice, either it's not the real invoice, or the dealer is receiving huge incentives from the factory making selling at invoice or slightly below a very profitable deal indeed.

10% under published invoice was a reasonable estimate of what to pay in normal times, but these days with very high factory to dealer and factory to buyer incentives, it may result in much too high of a price being paid. I.e., nowadays you routinely see dealer sales even on popular vehicles, "all at this price" (rather than "one at this price") where the price is way below 10% under invoice.

It's more important to find out the dealer cost than the invoice price, since they are very different. Take the invoice price, subtract the holdback and other manufacturer kickbacks, and subtract the factory to dealer incentives (which can be difficult to uncover since these are not normally made public).