What factors into the price of a car or vehicle?
- English
- Español
Manufacturers set a base price for a car or vehicle without add-on products or features. The Manufacturer Suggested Retail Price (MSRP) is the base price plus additional features. Keep in mind that there are other costs and fees will factor into the total cost of your vehicle.
The manufacturer’s base price is the cost of a vehicle without optional features, such as a sunroof, and add-on products, such as extended warranties or service contracts. The Manufacturer Suggested Retail Price (MSRP) is the price that the manufacturer suggests the dealer offer it for, with recommended options and features included. While these numbers are informative, many experts suggest the dealers invoice price is a better place to begin negotiations.
Manufacturers might offer special incentives to dealers and consumers on certain vehicles, such as cash rebates or 0% APR financing, especially if they have a large inventory that they’re needing to sell. With these promotions, check the fine print to see whether you qualify. Promotional interest rates are often limited to people with high credit scores or to loans with shorter terms.
While it’s tempting to calculate your monthly payment on the advertised price, other costs and fees ultimately make up the price you pay for the car, as well as what you pay over the life of your loan. For example, the interest rate and optional add-on products add to the amount you’ll need to borrow to purchase the vehicle, while insurance, maintenance, and gas factor into the longer term costs of owning a car.
You can also negotiate certain costs, such as the price of the vehicle, interest rate, and trade-in. To find the deal that’s right for you and your budget, make sure to shop around with multiple dealers and lenders.
Know before you shop for a car or auto loan
Save yourself valuable time, money, and stress by asking these questions before you shop for a car or auto loan.