What’s the Deal with Dealer Holdback?

Dealer holdback? Just when you think you’ve learned about all the workings of the car dealership, you find out there’s more. One of the least-known figures that is part of the car sales equation is the dealer holdback. Knowing the dealer holdback is important because it can save you big at the dealership!

MSRP & Invoice Price Versus Dealer Holdback

MSRP, or the Manufacturers Suggested Retail Price, is simply the price at which a manufacturer, such as Honda, wants to sell a particular car.

Invoice price is the price paid by the dealership for the vehicle.

Dealer holdback is a percentage of either the MSRP or the invoice price of a vehicle. The percentage varies by manufacturer, and usually ranges from 1% to 3%. The holdback is paid to the dealership after the car is sold to a new car buyer. It is not discounted when the dealer purchases the car.

How knowing dealer holdback can save you big at the dealership

Because of dealer holdbacks, some dealers can actually sell some car makes at below the invoice price.

Let’s take Nissan as an example. If Nissan pays a dealer holdback of 2.8% of the total invoice price, and a Nissan dealer pays $13,000 for a new Sentra, after the dealer sells that Sentra, Nissan will send the dealer $365 ($13,000 x 2.8%).

This means, if the car dealer sells you a car at the invoice price, you might think you’re getting a better deal than you actually are.While the dealer likely is providing you with a great deal, it may not seem quite as good if you know about the dealer holdback on the car you are buying.

When looking for a new car, it pays to be informed. At Buyingadvice.com, we can provide you with the dealer invoice price on any new car you want, so you can get the best deal possible at the dealership. Simply request a free quote today – it’s fast and easy, and there’s never any obligation.