Manufacturer’s suggested retail price (MSRP) is a term that you will likely hear salespeople throw around often when shopping for a new car. And lacking a firm understanding of what MSRP is and how you can use it to your advantage could cause you to miss out on the best deal. Be prepared before walking into a showroom by brushing up on the language of pricing.
Sometimes referred to as the “sticker price,” MSRP is the price tag that an auto manufacturer puts on a vehicle. It can be found on the window of any car, as required by federal law. However, this price is not set in stone. Dealerships have complete freedom to change the final selling price of the vehicle depending on popularity and age. After all, MSRP is simply a suggestion.
It is important to understand that MSRP is meant to give consumers an idea of how much the dealer would like to charge for a vehicle, but may not necessarily represent the final selling price or include every additional fee, such as:
- Sales Tax: Tax on every purchase, which varies from state to state
- Invoice Costs: The price a dealer paid a manufacturer for the vehicle
- Destination Fees: Travel fees to transport a car to the dealership
The MSRP can be used as a jumping-off point to negotiate the price of a vehicle with dealers. For instance, if you have your eye on a vehicle that was made a few years ago and is not currently in high demand but see that the MSRP is still high, you may be able to haggle dealers down 10-20%. On the other hand, if you are interested in the latest model that just arrived in the showroom with a high MSRP, dealers may not negotiate with you at all.
If you do your research on the type of car you’re looking for, determine how much you can afford to spend, and understand key pricing terms before walking into a dealership, you can be confident you’re getting the car of your dreams for the best price.
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