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Common terms used when describing the price of a car

Negotiations often have a vocabulary of their own. Here are some terms you may hear when you’re talking about the price of a car:

  • The Invoice Price is amount the dealer owes the manufacturer. It is important to note that the invoice price does not include any rebates, allowances, discounts, or incentive awards that would reduce the price for the dealer.  Generally, the invoice price should include freight (also known as destination and delivery). If you’re buying a car based on the invoice price (for example, “at invoice,” “$100 below invoice,” “two percent above invoice”) and if freight is already included, make sure freight isn’t added again into the sales contract.

  • Base Price is the cost of the car without options, but includes standard equipment and factory warranty. This price is printed on the Monroney sticker.

  • Monroney Sticker Price (MSRP) shows the base price, the manufacturer’s installed options with the manufacturer’s suggested retail price, the manufacturer’s transportation charge, and the fuel economy (mileage). This label is affixed to the car window of new automobiles and required by federal law. Only the purchaser may only remove it.

  • Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.