TDA fee on the invoice

[Quetico]

Guys,

I am working out a deal on a new Trail, and this TDA fee has thrown me for a loop. The invoice shows a TDA fee of $818! From my research online, it looks like this is a legit fee, but it feels steep to me. I am in Denver, but I understand that they vary by region. Are you guys paying a TDA when you buy, and if so, what was it on your invoice?


Quetico

 

[bofa]

Guys,

I am working out a deal on a new Trail, and this TDA fee has thrown me for a loop. The invoice shows a TDA fee of $818! From my research online, it looks like this is a legit fee, but it feels steep to me. I am in Denver, but I understand that they vary by region. Are you guys paying a TDA when you buy, and if so, what was it on your invoice?


Quetico

Ad fees are commonplace for Toyota, and are non-negotiable. Each region has a different fee - be glad you aren't in the Southeast... we pay a little over $1100

 

[CoKen]

I just purchased a 12 Limited a couple of weeks ago at GO on Arapahoe. On the window sticker there was a listing for delivery processing and handling for $810. Once we started talking price it was just rolled into the total cost, so I'm not sure where it ended up.

 

[shadow247]

There's no reason YOU have to pay that fee. Adding another 800 bucks on top of the selling price seems a bit steep. I would offer the dealer a price that does not include the fee. The worst they can do is say no.

 

[blizz86]

Guys,

I am working out a deal on a new Trail, and this TDA fee has thrown me for a loop. The invoice shows a TDA fee of $818! From my research online, it looks like this is a legit fee, but it feels steep to me. I am in Denver, but I understand that they vary by region. Are you guys paying a TDA when you buy, and if so, what was it on your invoice?


Quetico

it sounds about right. truecar, amex car program, all have around 800 for the tda

 

[bofa]

There's no reason YOU have to pay that fee. Adding another 800 bucks on top of the selling price seems a bit steep. I would offer the dealer a price that does not include the fee. The worst they can do is say no.

If you negotiate, it isn't coming out of that fee. It's coming out of the profit/holdback. The dealer has to pay the fee to their respective regional distributor for each new vehicle sold.

 

[STLDAVE]

Guys,

I am working out a deal on a new Trail, and this TDA fee has thrown me for a loop. The invoice shows a TDA fee of $818! From my research online, it looks like this is a legit fee, but it feels steep to me. I am in Denver, but I understand that they vary by region. Are you guys paying a TDA when you buy, and if so, what was it on your invoice?


Quetico

Bought my TE last September at Stevinson Toyota in Denver and the paperwork shows a "Total Vehicle Price" and a "Dealer Handling" charge of $499.50. I don't know if this is the same thing or not, but any negotiations you have should be for the "out the door" price, and let the dealer split that price up however they like.

 

[Silver T4R]

Bought my TE last September at Stevinson Toyota in Denver and the paperwork shows a "Total Vehicle Price" and a "Dealer Handling" charge of $499.50. I don't know if this is the same thing or not, but any negotiations you have should be for the "out the door" price, and let the dealer split that price up however they like.

I agree with STLDAVE, Always negotiate an "out the door price" or they will fee you to death.....

 

[bofa]

If you really want the upper hand make use of the sites that break down the pricing, like Truecar. You can find out what the dealer actually paid for the vehicle and what fees are actually required (ie Regional Ad and Destination in Toyota's case). You can also figure out the dealer's holdback that is built into the invoice price. If your dealer is tacking on an additional admin fee like some around there, that's pure profit and totally negotiable.

Keep in mind the dealers are in business to make money. You need to push them until you find that sweet spot between you paying the lowest possible price and them making enough money to make it worth their while. IMO about $500 is a reasonable profit for a new car. Some squeeze out a bit more but most people overpay thousands.

 

[MeetJoeAsian]

Total invoice cost is what it is...regardless of what fees (other than holdbacks) there are that are added to the invoice price, the total is still what the dealership pays for the vehicle...the fees are charged to the dealership, and regardless of what you see online, they don't have to disclose to you what they pay for the vehicle...if they choose to make a smaller margin on a vehicle for you, then so be it...remember this MSRP is Manufacturer SUGGESTED Retail Price...it's suggested that the car be sold at that price, but the dealerships aren't bounded to that price...that's why they can DISCOUNT the car, AND they can MARK UP the price above sticker if they wish...

here's an example, an inventory vehicle at a dealership is damaged, let's say somebody keyed the car before it is sold. Well, the dealership has 2 choices: they can fix the damage, or sell it with the damage. Now most of us will want something off for the damage if it's not fixed (some of us think that the dealership has to give them $10,000 off MSRP to justify for the damage), but regardless of whatever happens to that car before the dealership sells it, they still paid X amount for the car, and that didn't change with the damage....if they decide to fix the scratch, then now they own the car for X + "cost of repair"....so when they go to sell the car, which most of the dealerships will want to get rid of it ASAP, they are usually more than willing to take a smaller profit margin, or sell it under invoice...heck, if they can sell that car for sticker or over sticker, trust me, they would....and if someone thinks that the only justification for them to buy that particular car is if the dealership gives them half off, then well, the dealership will probably not sell that car to that person....

Many smaller dealerships that do not have the pocket to pay for their inventory up front have banks that buy the cars for them (called "floor plan", "floor", "flooring", or etc)...think of it as consignment....the bank owns their entire inventory, and the bank earns interests on the cars while they're sitting on the lot unsold....that is why some dealerships are willing to take a short deal on a vehicle that's been on the lot for some time vs. one that just came in....the interest that the dealership has to pay for that vehicle every month is an additional fee that incurs onto their "cost" for that vehicle...but, bottom line is, just like the TDA, it doesn't matter what the dealership owns for vehicle for, to the consumer, it's what they buy it for that matters....if the dealership price is not good for you, you don't buy the car....just like if the offer you make is not good enough for the dealership, they don't sell the car....

 

[MeetJoeAsian]

Now, in regards to the dealership fees, doc fees, or yada yada fees that the dealership charges to every deal, that's a fee that goes to paying for their daily operations, overhead, office personnels, etc. and every dealership has this fee...most dealerships will have some sort of a disclosure regarding this fee that you will pay when you go to contract the deal. Now I've seen this fee range from $125 to well over $1000. And yes, I think it's dirty for a dealership to charge you $1200 fee on top of the selling price and sadly, most people do not know this and think that it's part of the taxes, and yes, this is where negotiating "drive out" or "out the door" price may be beneficial. And this is where you actually get a better deal at one dealership vs another. The reason why is that this is (in most cases for a large "legitimate") a standard fee for doing business for them. And most larger legitimate dealerships have a disclosure for this (posted around the salesperson's desk or printed on the worksheet you negotiate on, etc ), in addition to having a line for this fee already pre-printed and fully disclosed on their contract from the printing company that prints all their contract for them. For these legitimate dealerships, this goes to show that it is a standardized fee for buying a car from them, just like "delivery/processing" fee that a manufacturer charges you.

Of course you don't have to pay this fee, well, in that case, you'll probably won't be buying the car either. And yes, just like manufacturers' "delivery/processing" fee, the dealership can negotiate taking this fee off, but in reality, they're just negotiate giving you a discount off their profit for that vehicle. Like I said above, this is where you can get a better deal from one dealership vs another. The reason why is because the salesperson and sales manager have no control over this fee. It is standard and they have to include this in the final price. So if you're a salesperson working at a dealership that charges $125, the loss of profit isn't so bad as working at a dealership that charges $1000, where you will have to discount that much to make a deal happen for the customer, and usually in that case, the profit margin is so low or at a loss, thus they can't sell the car to the customer and they lose a deal.

(sorry, I'm in bed on my blackberry playbook typing this with the lights off...So if it doesn't make sense to you, ask me questions or I'll try to explain better when I'm at my desk tomorrow)

 

[KidVermicious]

That's cool info, Joe, thanks!

 

[Atlanta_man]

When anyone tells me that it is a 'standard' or 'policy' I just say goodbye. That's my policy.

 

[bofa]

Good insight Joe - let me try to build on that a bit...

Basically, you as the consumer are negotiating between what the dealer paid for the vehicle and what you are willing to pay. They are the middle man trying to scrape some profit off the top, just like any other reseller.

But, when you pull pricing online or god forbid wander onto a lot, there are different prices, which is where people get lost. In many cases, but specifically Toyota's for this conversation, you usually see:

MSRP: Cost (not negotiable) + Holdback (negotiable) + Regional Ad Fee (not negotiable) + sometimes additional profit (negotiable)

Invoice: Cost (not negotiable) + Holdback (negotiable)

Destination can sometimes show up further down the price sheet, after the negotiations, or they'll add it to any OTD price, but don't ignore it! It is not negotiable and will always be present in the numbers.

You may also come across an extended option sheet, which usually lists full MSRP or more for dealer-installed options. Never ever ever pay this price.

Toyota's holdback is 2% of the MSRP for the factory invoice. In the case of my SR5 4WD, it came to $658. There is additional room for profit in add-ons/accessories, not to mention boatloads to be made in the F&I office with additional coverage and insurance products.

Also keep in mind if there are any incentives, that these should be subtracted from the cost, not MSRP, and not pocketed by the dealer.

Also - keep away from Toyoguard. These usually have 100-200% markup and are not worth even the "cost" in most cases. You can do VIN etching, fabric protection, oil changes, etc for much less... if you couldn't, why else would they be selling it? If the car is already on the lot it might be too late but you can still negotiate. I found it easier to avoid if I could get something that was still at the port. SET is notorious for adding this to every vehicle in the region.

My goal is to always dip into the holdback when I negotiate. When all is said and done my goal is to pay total dealer cost + $500 or less total profit + required fees (Regional Ad + Destination). I avoid additional maintenance packages in F&I and get GAP through the lender or my insurance company (depending on price and terms and if I do not have a substantial downpayment).

So any way you slice it you are paying
Cost
Profit
Regional Ad
Destination
TT&T

For some it might be easier to negotiate OTD. For me I like to know the breakdown. I'd rather know ahead of time if I can afford the actual cost of the vehicle, if I have additional wiggle room in negotiations, or if I'm running out of holdback to where the deal becomes unrealistic. It's also very telling of the kind of dealer you are working with.

For example when I was working with 1 dealer that was trying to get me on the lot I could see that I had him down to less than $100 in holdback, which doesn't make sense. This led me to probe more and I found out that he was going to tack on an additional $599 dealer admin fee (aka profit). So not only did I save myself a trip I had a better idea of what profit he wanted to make and could negotiate without any surprises. This eventually led to getting him down another $300 and another dealer beating his price. I let that dealer get some additional profit on port options and accessories though - like I said $500 is usually fair imo. But I like to be in the know. Ignorance is not bliss for me.

 

[STLDAVE]

Good information from JoeAsian and bofa. Knowledge is a wonderful thing and we should all do our homework before talking to the salesman. But in the final analysis, the only number that's important is the number you write on the check.

Know what the biggest number is that you are willing to put on that check, and walk away if the total the dealer wants is higher than that number. If you agree to a higher number you will never feel right about it. If you can get the total to be less than that number, feel good about getting a great deal!

And let the dealer worry about how he splits that number up to fill in the blanks on the sales form.

 

[Quetico]

So any way you slice it you are paying
Cost
Profit
Regional Ad
Destination
TT&T

For some it might be easier to negotiate OTD. For me I like to know the breakdown.

Same here, I worked the breakdown of each line item. The TDA fee was a line item that I'd never seen before, as I'd never bought a new Toyota. It was on the invoice, but I didn't know if it was a legit fee, or a holdback item. As has been discussed, it is a legit fee (ie. cash out for the dealership, not a profit).

In my case, we had agreed upon invoice + $500, but the TDA made the invoice higher than I had expected. We ended up settling with the use of some of their holdback money. In the end they are getting $500 plus some of the holdback, and I am getting a new 4Runner. And I was under the TrueCar price, so I felt good about that.

All of this conversation proves why the "prices paid" threads are all irrelevant. There are so many variables such as trim levels, options, regional fees, etc. that make it impossible to compare. Focus on the invoice and legit fees, and go from there.

 

[Quetico]

Many smaller dealerships that do not have the pocket to pay for their inventory up front have banks that buy the cars for them (called "floor plan", "floor", "flooring", or etc)...think of it as consignment....the bank owns their entire inventory, and the bank earns interests on the cars while they're sitting on the lot unsold...

Just a point of clarification here: ALL franchised dealerships big and small have floorplan lines in place. Either with a bank or captive finance company (TFS, et al.). Their manufacturers require them, and they automatically draft on the floorplan lines once the cars leave the factory.

 

[WFO_Racer]

Some very good information here, not sure it was mentioned before but conduct all business via email. Advantage is you have it in writing and you are in neutral turf. I never deal with salesmen ( order takers really) they are not in a position to lower price for the most part. Once a price is agreed upon set a time to collect the vehicle I ask that the vehicle be brought up front for final inspection. Since I hate giving money away I prefer to save up and pay cash so I tell them the paperwork must be done in less than 45 minutes since I have a previous appointment. Usually that appointment is kart racing with my sons. Less time ****ing around a dealer the better for me.

I love to negotiate so car buying is a game to me. Lastly I always include my sons ages 13 & 11 in business deals part of my role as a dad is to mentor my guys on life and using money as a tool is a great life lesson.

 

[CoKen]

I read someplace, but didn't try it, that after conducting "all business via email", you can ask that the car be delivered to your house. That way, you don't wait for them to prepare the paperwork and once the car is at your house, you do your inspection, sign the paperwork and your are done.

 

[bofa]

I read someplace, but didn't try it, that after conducting "all business via email", you can ask that the car be delivered to your house. That way, you don't wait for them to prepare the paperwork and once the car is at your house, you do your inspection, sign the paperwork and your are done.

Yep you can. Many dealers now offer free delivery in order to compete with dealers that are closer to your residence. It really depends on the deal though. If you are financing through the dealer or have a trade it becomes a little tricky. Plus you lose the power of "walking away". You could always kick them off premises but that becomes an awkward way to conduct business. Free delivery usually involves someone else driving your car too... which I'm not too keen on.