New car buying: msrp vs base vs invoice prices

Some of the definitions car dealers use can be confusing. Here are the simple definition of base price, invoice and MSRP.


Buying a new car can be very overwhelming. You want to make sure you receive the lowest price possible for the car you are buying. This can be tricky with car dealerships using different prices to explain the deal you are getting. Therefore, with a little more knowledge, you can make a better decision when purchasing your next car.

You may not know it, but the United States Congress passed a law ensuring that car dealerships give you the information necessary in purchasing your new car. The law is commonly called the Monroney Law, after its sponsor Mike Monroney. Officially, the law is titled the Federal Monroney Act of 1958. This sticker is required to be placed on all new cars and cannot be removed by the dealer. The fine for not having a sticker on the front or side window is $10,000 per vehicle. Tampering or changing the sticker also carries a hefty penalty. The sticker has to include several things: manufacturer’s Suggested Retail Price; Manufacturer’s suggested price for each accessory; make; model; and final assembly point among other items. These items will assist you in making a smart decision in choosing a car.

The MSRP is the Manufacturer’s Suggested Retail Price. The maker of the automobile suggests this price. For automobiles, the MSRP is required to be listed on the sticker of the new car. If you have shopped for a new vehicle, you may have seen these stickers, as the dealership is required to place them clearly on the side window. This sticker is called the Monroney sticker. On the Monroney sticker, you should be able to see the base price, standard options; factory added options (prices for each of these) as well as the MSRP. The MSRP can be found on many different websites. Most car manufactures’ will have the MSRP listed on their websites.

The base price of a new car is the price of the car with no added factory options. Many cars come with standard options; these are included in the base price. This price does not include taxes, title, delivery and other options you may want to add or that were added to a vehicle. The base price is listed on the sticker in the window. You can find the base price of a car on the manufactures’ website. In addition, you can find the price of any additional options you may want on the car that you are buying. If you have this information you can better budget your approximate price range when shopping for a car.

The invoice price of a car is the standard price the car manufacturer invoices a dealership for a vehicle. This is not necessarily the actual price the dealership paid for the vehicle, as there are rebates and volume discounts that some dealerships qualify for, which lower the cost the dealer actually paid for the car. This price should include delivery and destination charges. Also, factory installed options will cause the invoice price to increase.

When buying a vehicle you are confronted with many different prices and sometimes it can be confusing. If you remember the differences between these prices and their definitions, you can make a better decision. Remember, always do your research before making a purchase.