Get a good price

The most intimidating part about car shopping, for many people, is trying to figure out what’s a good price to pay for a car you’re considering. That’s why it helps to understand how sellers arrive at an asking price.

With a new car, the manufacturer’s suggested retail price (MSRP) is usually the price you see on the sticker on the car’s window at the dealership. But that’s not necessarily the price you pay. Most dealers are willing to negotiate a price that’s below the MSRP but higher than whatever they paid to get the car on the lot.

But what did the dealer pay? The invoice price is the official price of getting the car from the car manufacturer, but dealers get bargains too. The actual price the dealer paid may be less than the invoice price, due to rebates, incentives, and special dealer discounts called holdbacks. You can get current information on a car’s invoice prices and rebates, incentives, and holdbacks from a number of online sites, including www.edmunds.com and www.bankrate.com. Then you can use that information to negotiate what you’ll pay.

With a used car, the process for determining the right price is a bit less clear. Used-car prices depend mostly on the vehicle’s mileage, or how far it has been driven, as well as its reliability rating or how well it is expected to perform for its age. When trying to figure out accurate used car prices, you might start by finding out what’s called the trade-in value — a fairly standard dollar amount determined by the car’s make and model, age, mileage, condition, and other features. The standard source is the Kelley Blue Book at www.kbb.com.