What Can the Holdback Do For Me? (Car Buying Tips)

First of all, almost all dealers carefully guard their holdback money. Since it artificially inflates the invoice price, they feel entitled to get it back. It is never a good idea to mention the holdback early in your negotiations since it will get the negotiation off to a bad start.

With that said, it sounds like the holdback is of no use to you. Well… not actually. It is helpful for you to know if the dealer could sell the car at invoice and still profit $600. In negotiating price, the dealer should make a profit and you should do well also. If the salesman says that your bid is going to lose money for the dealership, you can at least know that he is not being entirely truthful with you. Stand your ground and don't come up to his price and you should do well.

Taken from The Car Buying Bible, a 162-page car buying guide which features car buying tips and car loan calculators. Written by a former car salesman, college math instructor and health insurance analyst.