Auto Loans and Pricing: How to Navigate the Window Sticker

What's the deal with sticker prices? They've been required on cars since since the passage of the Automobile Information Disclosure Act of 1958, requiring a window sticker for every new car on sale to list pricing details and vehicle specifications. It pays to look over the stickers on a number of vehicles in the same size and class at several dealerships to develop a price range before seeking any auto loans to cover a particular make and model.

The window sticker has changed considerably since 1958, and since 2013 automakers have been required to add data on model fuel economy, smog and greenhouse gas emissions, and there are new labels for vehicles with alternative power (electric, natural gas, hybrids, and fuel cells). Walk into a showroom and the window stickers typically show:

  • Vehicle Description: This block of information shows the year, make/model, and vehicle information of the car or truck. It details the weight, body style, passenger capacity, transmission type and engine size.
  • MSRP: The manufacturer suggested retail price (MSRP) does not include destination charges, add-on optional equipment, taxes, registration, or title costs.
  • Standard Equipment: This section of the sticker lists what is included in the MSRP without additional custom items. Typically it will list safety and warranty features, sound system, heating and air conditioning.
  • Optional equipment and pricing: Don't overlook this section when determining your target ceiling for auto loans. Dealership add-ons like special paint or trim are listed along with their price, sometimes printed on a separate sheet and posted beside the main sticker. Optional items can add up quickly into the thousands, depending on the type of vehicle, and can run the total price well beyond affordability. Premium sound systems, stylish wheels, custom floor mats, leather seat packages and fog lamps can turn a modest compact car into a small luxury vehicle.
  • Destination and delivery: Consumers end up paying what it costs to get the vehicle off the ship and trucked to the showroom, typically in the $600 range, based on model rather than actual distance.
  • Fuel economy: The sticker lists miles-per-gallon estimates for city and highway driving. Electric cars and hybrids typically come with a miles-per-gallon equivalent total. It's useful in pricing to know the estimated annual fuel cost, now included on the sticker.
  • Government safety ratings: This panel indicates how the vehicle rated in front/side collision and rollover safety tests based on standards established by the National Highway Traffic Safety Administration.
  • Dealer processing fee: These fees often include charges for arranging and processing dealer financing, another reason why consumers can save money by shopping for their own auto loans.
  • Total: The "full price" determined by adding MSRP, optional equipment, destination, and any dealer discounts.

It's not surprising that the gulf between the MSRP and the total price can cause serious sticker shock. That's why starting with the MSRP in negotiations (rather than the total) and knowing what each item costs along the way may give buyers the greatest pricing flexibility. The process can be simplified down to: pricing the auto and its features, shopping the loan, and then shopping for the car.

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