If you are in the market to buy a vehicle, having an understanding of car pricing terms and what they mean will help you get the best deal possible. So, before setting out for your local dealership, take a minute to learn the definitions of some basic terms that you will probably encounter when you are either looking at a car or talking to a salesperson.

Common Car Pricing Terms

Professionals in the auto sales industry have developed their own vocabulary, and you will often hear salespeople throw around unfamiliar lingo. As a car buyer, you don't need to make yourself "fluent" in dealer-speak. But knowing a few terms will help if you want to simplify the negotiating process.

Sticker Price

This price is literally the number that is printed on a vehicle's window sticker, hence the name. And if you were in the habit of purchasing cars the way you buy laundry soap or paper towels, the sticker price would represent the amount that you would pay for the vehicle. The sticker price is also referred to as a car's MSRP, or manufacturer's suggested retail price.

In an auto dealer's perfect world, all car buying customers would pay the sticker price, every time. This is because this price is typically the resulting sum of the vehicle's invoice price plus the amount of profit the dealer would like to make on the sale of that vehicle. However, price negotiations usually start with the sticker price. It is widely understood that the goal of most consumers is to pay less than this amount.

Invoice Price

This is the price that dealers pay manufacturers for the cars, trucks and SUVs on their lots. It is the amount quoted on the invoice that comes with a vehicle when it is shipped to the dealer. Many car buyers will ask to see the invoice associated with the car they want to buy.

Why are dealers okay with showing invoices to customers? Dealers often receive "holdback" checks from auto manufacturers. The holdback on a car is a percentage of the sticker price or invoice price that the manufacturer pays to the dealer when the vehicle is sold. So, even if a dealer sells a car at invoice or even a little below the invoice price, they may still earn a profit from the holdback amount.

car pricing terms

Kelley Blue Book Price

There are several sources available if you want to get a "fair" price for a new or used vehicle. Kelley Blue Book has been around the longest. Once published as an actual blue book, Kelley Blue Book prices (or "blue book values") can now be found on KBB.com.

If you want to know what customers in your area are paying for a certain vehicle, you can consult KBB.com. And knowing that vehicle's blue book value will give you a rough estimate of the trade in value that you can expect.

Keep in mind that the very best vehicle prices and incentives will usually be reserved for buyers with excellent credit. However, you can still get a good deal and affordable auto financing with less than perfect credit.

Fair Vehicle Financing

It is easy to get discouraged if you are trying to buy a car with bad credit. But Drivers Lane can help make the process fast and easy. We can match you with a local dealer that can work with unique credit situations. You may even be able to purchase your vehicle with little or even no money down. Also, our service is free and places you under no obligation to buy.

Just fill out our fast and secure online application to get started today.