The ultimate price you pay for a car is almost always up for negotiation, but the price has to start somewhere. Starting prices, called the Manufacturer’s Suggested Retail Price (MSRP), are on the window sticker of new cars. These stickers can be overwhelming. It is usually at least a full-sized piece of paper with lots of numbers and fancy terms that eventually add up to the MSRP for that particular vehicle. Some people only look at the final price and don’t read what the sticker price of a new car includes. Here is what you need to know.
About Monroney Stickers
The sticker on the car window, required by federal law, is called the Monroney sticker. According the Federal Trade Commission, this sticker can only be removed buy the purchaser of a new car. If the sticker is missing, you should probably look elsewhere for a new vehicle. The Monroney sticker has many facts and figures about the car on which the sticker has been placed. These facts include what is considered standard equipment, fuel economy, environmental statistics, government safety ratings, information on where the car parts came from and, most importantly, options and pricing.
What the Sticker Price of a New Car Includes
The options and pricing section generally starts with the standard vehicle price with no options or fees included. Next, the sticker will add any manufacturer installed options and their suggested prices to the standard vehicle price. Manufacturer installed options are normally things like polished aluminum wheels and premium speaker systems. The sticker should sum the price of all the options to arrive at a total vehicle and options price. Next, the sticker will show you the destination charge, or the cost the manufacturer adds to the price of the car to deliver the new vehicle from the factory to the dealer. Once the destination charge is added to the vehicle and options price, you’ll arrive at the final MSRP for the car.
However, there may be additional options and fees not included on the Monroney sticker.
There May Be a Second Sticker Price on Your Car
Cars aren’t always complete when they leave the manufacturer. Once a car arrives at a dealership, the dealership may add additional options on to the car. Sometimes these options are as simple as spraying the fabric with a stain repellent, rust proofing the underside of your new car or etching the VIN number into your windows. These options cost extra, so the dealer adds a second sticker price that further increases the price beyond the MSRP. Dealers might also add line items called ADM (additional dealer markup) or ADP (additional dealer profit) or dealer preparation fees with the hope that buyers will just pay the full-stated price. These additional fees can usually be negotiated away to help the buyer feel like they are getting a good deal, when in reality they may still end up paying the MSRP. For that reason, many experts recommend against buying a car with dealer added options. You may not always have that choice if a car with dealer added options is the only car on the lot that meets your requirements.
Armed with the information of what the sticker price of a new car includes, you should be able to negotiate a better deal on your next new car purchase. Just make sure that you have your financing lined up before you head to the dealership. When shopping for financing, you can get the best deal possible by getting multiple quotes. Then, when the dealership shows you their financing options, you can pick between the dealer’s financing or your own financing depending on which will save you the most money overall.
Catherine Alford is the go-to personal finance expert for educated, aspirational moms who want to recapture their life passions, earn more, and take on a more active financial role in their families. Named the Best Contributor for Personal Finance in 2014, she has written for Yahoo Finance, U.S. News and World Report, The Huffington Post, Kiplinger, Investopedia, Business Insider and many more. Catherine is the founder of personal finance blog BudgetBlonde.com and is the innovator of the web course, Get Paid to Write for Blogs.
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