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Is the Sticker Price on a New Car Higher or Lower than MSRP?
Is the Sticker Price on a New Car Higher or Lower than MSRP?
In the world of automotive sales, there are terms and definitions that can be confusing for the average consumer. One of the most important concepts to understand is the difference between the sticker price and the MSRP (Manufacturer's Suggested Retail Price) of a new car. This article will delve into this topic, explaining what each term means, and why the sticker price might be higher or lower than the MSRP.
Understanding MSRP
MSRP, or Manufacturer's Suggested Retail Price, is the recommended retail price set by the car manufacturer. It is the price that a dealer is expected to charge for the vehicle before any additional costs or discounts are applied. The MSRP can be found on the window sticker or sticker plate of a new car.
The Role of Dealerships
Once the car is delivered to a dealership, the sticker price they present to potential buyers is usually the MSRP. However, there are instances where the sticker price might differ from the MSRP:
When the Sticker Price is Higher than MSRP
In most cases, when the sticker price exceeds the MSRP, it suggests that the dealer has added their own mark-up. This is a common practice in the industry, as the dealer adds a percentage on top of the MSRP to cover expenses and make a profit. These additional charges might include:
Document processing fees Destination fees Customization packages Add-on features (such as extended warranties, cargo nets, etc.)While these add-ons can come with attractive deals, it's essential to understand all the charges before making a purchase.
When the Sticker Price is Lower than MSRP
Oddly enough, there are situations where the sticker price might be lower than the MSRP. This could happen under the following conditions:
Dealer Incentives: Manufacturers often offer incentives to dealers to help move their vehicles quickly. These incentives can manifest as rebates or special financing options, which are then reflected in the lower sticker price. Selling a Large Number of Vehicles Quickly: In times of overwhelming demand or to clear out older models, dealers might offer discounts. This can result in a sticker price that's lower than the MSRP. Clearing Out Inventory: Dealers who need to expedite the sale of a large number of vehicles often offer substantial discounts to clear the inventory, leading to lower sticker prices.While a lower sticker price might sound appealing, it's crucial to verify the car's condition and any hidden fees that might come with the deal.
How to Find the True Value of a New Car
Understanding the difference between the sticker price and the MSRP is crucial for making an informed purchase. Here are some tips to help you find the true value of a new car:
Research Thoroughly: Use online resources like Kelley Blue Book, Edmunds, or NADA to find the MSRP and compare it with other dealers' sticker prices. Check for Incentives: Understand what incentives the car manufacturer is offering, as they can help you negotiate a lower price. Ask for Transparency: Don't hesitate to ask dealership staff about any additional fees or discounts they are offering. Consider Used Cars: Sometimes, negotiation is easier on used car dealerships, who are more likely to offer lower prices due to the urgency of making a sale.By understanding the sticker price and MSRP, you can navigate the complexities of car buying more effectively and ensure you find the best deal for your new car.
Conclusion
The sticker price and MSRP can sometimes be different, whether due to dealer mark-up or incentives from the manufacturer. By researching thoroughly and asking questions, you can find the best deal on your new car and avoid hidden costs. Whether you're looking to buy a car with a higher sticker price or a lower one, understanding the full picture will give you the confidence you need to make an informed decision.