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Health & Fitness

Buying a New Car? What's the Factory Invoice and Why Should you Care?

Looking at a new car? Want insider information on what to look out for? Curious what the factory invoice is and how it effects you? Read on....

Are you looking to buy a new car? Does the process terrify you because you are so afraid of getting ripped off? I hope I can help change that. 

Believe me, I understand.  I am the world's worst negotiator (it's true). My husband always teases me that I "lay down" for good customer service. It's who I am, what can I do?

I try to go incognito when I'm doing "mom" stuff. It doesn't work very well. Someone at a cocktail party, PTO meeting or the side of a ball field inevitably asks me what I do for work. As soon as the words "car dealer" are out of my mouth, the questions start to roll.

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One of the top three questions asked is, "is the factory invoice real or do you phony them up?" Most of the time I'm thinking, "can I just watch my kid hit the ball?" but I always remain polite and answer thoroughly. I consider it my mission to help make the car buying process more enjoyable.

So, I know, I know, you want to know as well. Is the factory invoice real?  Here's my answer in a nutshell:

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1. What is a factory invoice? A factory invoice is the mechanism by which Hyundai (or any other manufacturer) bills us for the car we buy from them. That's it, plain and simple. It's no different than the invoice Cumberland Farms gets from Guida's milk or that The Wood N' Tap gets from their produce distributor.

2. What's on a factory invoice? The top part of a factory invoice shows all the relevant information about the car. It shows where it was manufactured, the VIN number, the engine number, who it was billed to, etc. Then, it shows a list of equipment, what the equipment and the car cost us (invoice price) and the MSRP (manufacturer suggested retail price).  There are three dollar amounts that people always ask me about: Advertising - there is a cost on the invoice for advertising.  This is a hard cost to the dealer. Hyundai charges a fee to advertise their cars in our area. We can't get out of it, negotiate it or reduce it. Shipping - there is a cost on the invoice for shipping. This is also a hard cost to the dealer. Hyundai ships the car either for Korea to Baltimore where it gets put on a car carrier or from the plant in Alabama where it goes on a rail. Again, this is a hard cost to us. Holdback - holdback is pure profit to the dealer. Holdback was developed 50 years ago. The auto manufacturers thought dealers where terrible money managers. So, the manufacturer "held back" part of the profit in the car and sent it to the dealers separately.  Although most dealers are very savvy business people nowadays, the tradition remains.

3. Is the invoice real? Yes, yes and yes!! I swear on my kids, my husband, my mother, my brother, and my pet fishes' lives. Dealers run sophisticated businesses with many moving parts. We answer to just about ever authoritative body out there; DMV, Department of Justice, Attorney General's Office, Department of Labor, OSHA, Federal Tax authorities, local and state tax authorities, and on and on and on. I do not know one single dealer who would risk their livelihood, their freedom and most importantly their ethics, to phony up a factory invoice in order to make another couple hundred dollars. Most dealers are happy to show you the factory invoice if you ask. Just remember, there are a lot of moving parts to purchasing a car. The price you pay is only one piece of it. Don't forget about the interest rate, term of the loan, the amount of money you put down, and the value of your trade. I'd love to hear your comments and questions below or email me directly at jillcares@keycars.com

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