What is holdback, and how much did your dealer make on your car?
According to TrueCar, holdback makes up anywhere from one to three percent of the price of a car. In the most nefarious interpretation, holdback is a built-in rebate that spikes the dealer's invoice price. If a manufacturer wanted $20,000 from a dealer for a car, knowing that it might need to pay a two-percent holdback once the car is sold, the manufacturer makes the dealer pay $20,400 for the car. That $20,400 is now the official invoice price that appears on the breakdown. Once the car is sold, the dealer gets a check for $400.
Holdback is an inexact number. It could be pegged to the base MSRP or the configured invoice or the configured MSRP, for instance. But it can allow the dealer a number of follow-on benefits, including being able to sell a car at invoice price and still make money. Not that a dealer would let it go for invoice, and $400 isn't much on a $20K transaction, but you get the point. TrueCar has a table of holdback percentages for various manufacturers, but be as wary of having too much information as too little.
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