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MSRP is a common acronym, but do you know what it means? Bankrate explains it.

What is MSRP?

MSRP is an acronym commonly used for manufacturer’s suggested retail price, which is the recommended selling price for a particular vehicle. A car or truck’s MSRP does not represent a done deal. You can negotiate the price with the dealership.

Deeper definition

When figuring the MSRP of a vehicle, you need to begin with the base price. The base price of a car represents the lowest-priced version, or trim level, of that particular model. Each trim level past the base trim model adds certain options to the vehicle and subsequently raises the price of the vehicle.

MSRP example

If you visit the dealership, vehicles on the lot should have a sticker in the window that lists the MSRP. Also listed on that sticker are all of the options the vehicle has.

Luckily, car manufacturer websites allow you to look at a model with and without various options figured into the price. While MSRP represents what the manufacturer suggests the retailer charge for the vehicle, it does not represent a hard figure, as many dealerships are allowed to charge what they want as long as the manufacturer gets paid its predetermined amount from the sale of the car.

Another factor to keep in mind when looking at a vehicle’s MSRP is the invoice price. The invoice price of a vehicle is the amount the dealership actually pays the manufacturer for the vehicle. The MSRP usually is at or above this amount. The manufacturer might discount this amount to help the dealership sell more vehicles. Either way, knowing how much the dealership paid for the car is a valuable bit of info and might give you a little wiggle room when negotiating the price of the car.

The vehicle market price represents the price on the market in your area. Knowing the market price of a vehicle, especially if it is lower than the MSRP or invoice price, can really give you some leverage when trying to get a good deal on a car. The easiest way to figure the market price of a vehicle is to visit car valuation sites, such as Kelley Blue Book and Edmunds.

Use Bankrate’s free calculator to estimate the monthly payment on your next new or used car.

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