auto

What is a dealer holdback?

 

What is a dealer holdback?

The Bankrate.com financial term of the day is: "Dealer Holdback"

It's not uncommon to see a car dealer selling a vehicle at a price that's "below invoice," or for less than the dealer's cost for the car. How is that possible? One explanation is something called dealer holdback. It's an amount a dealer receives from the manufacturer after the car is sold. A typical dealer holdback is 2 percent to 3 percent of the Manufacturer's Suggested Retail Price.

Don't feel sorry for car dealers when they say they're selling vehicles below cost. Dealer holdback provides dealers with some profit after the sale.

To find the best new cars and the best new-car financing, visit the Auto section at Bankrate.com.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
advertisement
advertisement

Blog

Stephen Pounds

Brexit pushes already-low gas prices down

Gas prices have fallen since the vote by the United Kingdom to exit the European Union last week.  ... Read more

advertisement

Connect with us