How to Buy a Car Below Dealer Invoice

If you're determined to get a car below invoice, you need to choose the right car. Avoid cars that are in high demand or limited production. Select a car around the time the new models come out -- usually in the fall -- and target the previous year's model. For example, select a 2013 model as the 2014 cars come out. When new models come out, dealers are often eager to move older cars off the lot. You can also save money if you're flexible with car colors; a dealer might have only one black car, but five red ones, and will be more eager to sell the color that's flooding the car lot.

If you walk into a car dealership with little knowledge of the car you want, you're a sitting duck who will fall for an assortment of tricks. Select the options you want, then research the car price on Kelley Blue Book or a similar website. If you want to buy below invoice, you'll need to know the invoice price, and dealers sometimes mislead customers about this price, so get the invoice price from an independent source. Research selling trends for the car and the average purchase price in your area. Then be prepared to show your research to the dealer.

A dealer invoice isn't necessarily an accurate reflection of how much a dealer paid for a car. While manufacturers bill dealers at invoice price, they also give dealers a small percentage back to cover invoice and overhead -- usually 2 to 3 percent. Dealerships focused on specific vehicle brands also frequently get incentives for selling a certain number of cars; a dealer who sells a car below invoice may still make a profit if the business is given incentives for selling more cars that month. Dig around online and look at forums and websites dedicated to your car choice. You may be able to find out how much a dealer actually makes on a car and use this as a negotiating tool.

If you want to get a good deal, you'll need to pit one dealership against another. Get a written estimate and, if it's not to your liking, move on to the next dealership. Explain the specific options you want and emphasize that you will go with the dealer who gives you the best price. Show each dealer the previous dealer's estimate, as well as any research you have indicating average selling price. If you know how much profit a dealer stands to make off a car, use this to shut down any manipulative lines a dealer gives you and remind the dealer you know he still stands to make a profit even if the car sells below invoice.