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Dealer Holdback questions
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Ed
$850 over invoice is a good deal, I'd suggest you quit worrying yourself to death over the fact that the dealer might make some profit on you.
Ed
HB is not profit, it's an amount of money that get's promised to the dealers to offset a percentage of the cost of the floor plan ..
All do respect, everything in life is negotiable. But, getting into HB discussions with dealers is about the quickest way on how, not too buy a vehicle.
Terry.
Seems like the HB may be payed twice to the dealership. Once by the consumer and again by Toyota. 2% HB suddenly becoming 4%..I've never gone after HB before in my years of auto purchases but seeing the HB added to the price (invoice)of the vehicle threw me off. I'm aware of people considering HB in the overall cost of purchase but seeing it upfront being passed onto the consumer doesn't seem legit.I think the HB is theirs to keep. I think Toyota and the dealership should negotiate that, not the consumer and the dealership.Paying HB upfront is something I've never done before. What would have been a reasonable profit $850-1250 with the HB up front and back becomes an additional $1458 plus the $850-1250...
If I'm not using Toyota Financing, is the FR charge something that I'm also responsible for??
I'm aware that everything is negotiable.I'm just wondering about other peoples experiences. These added fees may break the deal for me.I'm sold on Toyota quality based on my test drive/assessment of the vehicle and other peoples positive feedback on the product.I want to walk away with my vehicle and feel good about the overall experience.
: )
Mackabee
I think part of your confusion is the fact that, unlike other manufacturers, Toyota itemizes holdback on their invoice. That does not mean you as the consumer are actually paying it. If you compare Edmunds invoice price to the invoice for the same vehicle, you will see the actual values are the same.
As was mentioned earlier, holdback is credited to the dealer periodically, but it is not paid in cash on a per-car basis. Instead, it's a lot like the 1-3% credit card rebates you get from some banks, and is issued as credit.
kcram
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They are legitimate costs to the dealer as part of the invoice cost as well.
Ed
Using a national average...the typical new car dealer has $1200-1400 in expenses to sell a new car. so your offer of $800-1250 isnt any "profit" at all.
Geez
Ed
Car_man
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What it boils down to is that one of the dealers offering a very good price above invoice was tacking on holdback ontop of the invoice price for which holdback has already been included.Basically he gave me bad info and a "not as good of a deal price" as I thought it would be..Pays to be informed. Thanks for everyone's input.
The exact same thing happened to me when looking at a Highlander last year. A few dealers emailed me price quotes back. The best was $400 over invoice. I thought this was a fair price so I went in to talk to the guy.
All of the sudden the $400 over invoice became TDA plus SET fee plus DOC fee plus $1000 for a different color leather ( didn't know there was an upcharge for a different color interior, the brochure never mentioned this). In total it was about $2500 more than I was expecting. When I checked with some other Toyota dealers, they were all about the same. I took abtseller's advice to you, and walked. I ended up buying a different make of car.
The dealers and hosts here have given you some good advice. Just keep in mind the OTD price you are willing to pay. Do not get emotionally attached to any one vehicle, there are tons of alternatives. If you can wait a while, the newness will wear off and the price should drop some. In fact 2002 4 runners had rebates last year if I am not mistaken.
: )
Mackabee
This is whats on the Toyota website:
Options & Pricing
Material: Cloth Leather
Charcoal Cloth - $0
Ivory Cloth - $0
Gray - $0
Ivory - $0
It did not copy too well, but if you go to build your own for a Highlander you can see the same thing. The dealers did explain this, but it is confusing from the brochure and the website.
: )
Mackabee
Holdback is not bottom line profit!
I'm in the market for an '05 Toyota Highlander. I've been told by a NY area dealer that there is no dealer holdback on this car, which is a direct contradiction to the CR stated holdback of $628. The dealer wants to begin negotiating from his invoice price, which includes a $499 TDA fee (which I understand is an advertising fee, amongst other things). This essentially means that he's claiming that his cost for the car is $1127 higher than I would otherwise have assumed.
Am I being taken for a ride here? Any recommendations?
Do you mean on that specific vehicle?
Holdback is pro rated over 90 days, starting from when the vehicle becomes part of the dealer stock(if I'm not mistaken).
So If the vehicle has been on the lot past 90 days there is no holdback.
Thanks for the info!
None of that matters. The car will sell for it's MARKET VALUE. Offer him what you think is fair and see what happens!
You may be successful or maybe not?
___In any arena where bargaining occurs, those with the most cards (knowledge in this case) do end up with the best bargain most of the time. Not knowing if there is a given Percentage HB, Incentive (hidden or not), or even what the actual invoice is, might just add a few hundred dollars to the price SDE or any of us would have to pay.
___Haven’t you ever heard of a salesman telling a prospective buyer that their trade-in is only worth such and such when it is actually worth much more? Have you ever heard a salesman say “I am not making any money at that price”, when they actually were? This is where the RWTIV, Prices Paid, and the D-HB threads come to play. It helps educate the consumer which in turn does give said consumer the ability to offer a price the dealer might be willing to bite and in which the dealer still makes a profit. If the dealership doesn’t, he will not accept the price offered.
___Good Luck
___Wayne R. Gerdes
I think the below passage in the article is helpful:
"Almost all dealerships consider holdback money "sacred" and are unwilling to share any portion of it with the consumer. Don't push the issue. Your best strategy is to avoid mentioning the holdback during negotiations. Mention holdback only if the dealer gives you some song-and-dance about not making any money on the proposed deal when you know that isn't true."
Case in point - when we ordered a car through the dealer (didn't have what we wanted in stock, had to special order, etc.) the dealer tried to claim they wouldn't make any money and wanted to add a few thousand to MSRP (not to invoice, but MSRP). I simply mentioned that they would be getting all of the holdback since the car would be on their lot less thann 24 hours. The sale allowed the salesperson to make their monthly quota, helped the dealership, etc. The manager was quite funny and said that yes, they were making out fine with holdback and I wasn't forcing them for deep discounts, etc. Any other dealership would have been happy to take the order and make that money.
So I agree that it is helpful for the consumer to know about holdback, but don't use it as a weapon against the dealer unless you get the song-n-dance of "we don't make any money..." especially if the car is still sitting on the truck.
Again, just my opinion and experience.
isellhondas: I wouldn't care about holdback, invoice price, or any other issue pertaining to dealer cost if it weren't for one simple fact: if I don't do my research ahead of time, I risk paying much more for the car than its true value at this moment. Why would I want to do that?
Suppose I buy the car today, and then suffer some serious financial setback tomorrow (lose my job, for example) that would force me to sell the car and buy a less-expensive one. Obviously, I don't expect that to happen, or I wouldn't be contemplating the purchase of a new car. But what if I did lose my job?
I know that the car depreciates immediately upon my driving it off the lot. But if I sell the car tomorrow to someone else, I should be able to get back what I paid, minus that depreciation, but minus nothing else. If I overpay to start with, I'll take a bigger loss than necessary, at a time when I can least afford it. As you say, the car has some true market value now, but without doing research, I can't know what that value is, because the salesman is most certainly not going to tell me what that true market value is.
To be blunt, I find it obscene that I need to do all of this homework just to do something as relatively simple in life as buying a frickin' car. I wanted a Toyota because of their excellent reputation, but unfortunately for me, Toyota is one of the many manufacturers that essentially demands that the customer do his/her homework and negotiate accordingly if he or she wishes not to overpay.
SDE
And, that's fine! I have no problem with this at all. It's not the fault of Toyota. Every Toyota has a sticker price clearly displayed. That number represents what Toyota thinks is a fair and competitive price for that car.
Of course, depending on the marketplace, you can offer less and probably buy it for less and that's great!
"Overpay" is a pretty loose term and your car will depreciate no matter the price you paid.
Personally, I think a "fair" deal is when both parties feel good afterwards.
I know a lot of customers research their purchase to death, grind for hours, finally strike a deal and still drive home thinking they "overpaid".
Good luck in your quest, it really doesn't have to be that painful or difficult.
Terry?
Terry.
Sounds like things worked out exactly as they should! Congratulations!
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Actually, it is possible to lose money but it's usually on a used car. Paid too much for the wrong car, ran into unexpected reconditioning costs etc. After 60 days on the lot, the used car manager is sick of looking at it, takes a loser deal and learns a lesson.
Actually, it is possible to lose money but it's usually on a used car.
___Make sure you describe the other side of that equation as in when the used car manager made a quick $7,000 on an Acura SUV that he picked up at a Mannheim auction for a song that said customer who paid used retail never had the chance to participate in.
___Good Luck
___Wayne R. Gerdes
But, yes, most of the time dealers do (gasp) make a profit on the cars they sell.
7000.00 would be just a bit of a stretch.
Terry.
Terry.
Groovy! And I get KBB for my trade-in. We are, indeed, all happy.
My point wasn't about pricing - it's about what should and should not be relevant in negotiation. I won't mention holdback since it's none of my business if you won't try to lay a guilt trip on me for the price I'm getting. Either you want to do a deal at said price or not. Your profit, holdback, loss, whatever, doesn't interest me.
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Terry
The last salesman I had almost got down on his knees begging us to increase our offer. It was comical.
I am paying for a vehicle. If I get a free acting job for my money, that's even more entertaining. If the salesman gives a good performance and has a cup in his hand, I might even give them a dollar or two, just like I do to the street musicians I see on the Mall during lunch. No one calls me cheap.
I have a total "no fear of loss" attitude that is real. One sale or the lack of one will not affect my lifestyle in the slightest.
Of course, I try hard to make every sale but if I get a customer with a condensending attitude, they quickly learn I really don't need the business.
The car buying process is just fine the way it is. I don't see any reason to change anything.
Cars don't get picked up for a "song" at a Manheim auction. That dealer has to outbid every other dealer in the place to be successful.
___Really? Here is a copy of one of Terry’s recent home runs post # 23778 in the RWTIV thread:
rroyce10, "Real-World Trade-In Values" #23778, 18 Dec 2004 10:13 am
97 Lexus ES300 V6 51K miles.
Terry’s TIV/auction analysis: Dealer paid high 7’s/low 8’s per
Purchaser sees dealership asking $15,900 but dropped down to $13,700 with some negotiation.
___This is a 1997 Lexus with an ~ $8,000 mark up and maybe a $6,000 profit margin? The buyer was questioning if $13,700 was a good deal? Fortunately Terry led him away to a possible high 11’s mid-12’s for just a $4,000 gross profit on an $8,000 car!
___I think we can all do the math here and $7,000 sounds like closer to the norm more then the outlier for $20,000 - $30,000 used vehicles for those that don’t at least look up the values in KBB and Edmunds. Both Edmunds and KBB were ~ $1,000 above what Terry’s TIV/Auction analysis showed w/ a Good Condition 97 at 51K miles!
___We the customer know ~ what the car dealership pays for a given new car and we both bargain for what turns out to be a deal for the salesman/dealership or they wouldn’t do the deal.
___We the customer don’t have a clue as to what the dealership paid for the used one given what you and Terry have access too that we the customer do not. The more I read in this forum, the more I think KBB and Edmunds are closer to a joke then reality because you are accepting Trade-In’s at prices far below what Edmunds and KBB are saying the vehicle is worth. Sure the dealership still has to count the transportation, auction fee, and detail if they have to give it away at an auction but $1,000 under KBB and Edmunds for the above car? It is a Lexus at a Lexus dealership after all so I have to believe some of these are local trades with a few hundred $’s worth of tender lovin care thrown there way for a 50% profit Unfortunately I am one of the poor SOB’s that do not know any better :-(
$7000.00 would be just a bit of a stretch.
___If Terry’s analysis is good on the $8,000 97 Lexus ES with the dealership expecting $6,000 profit AFTER some negotiation, what is an 01 Acura MDX Base w/ 35 Klicks on it sitting on the lot of my local Honda dealership with a sticker showing “Great Deal - $28,995” when KBB says its worth just $20,495 as a TI and god only knows what the dealership gave the previous owners or what Terry can actually pick it up for at the auction(s)?
___Believe me, I am glad not to be in your business as I would be lucky to be eating Chicken Pot Pies once a day but when brand new Honda Accord’s are leaving the lots at $200 to $300 above Hold Back all over the country, the customer must be getting fleeced in other areas. It looks like the Used Car lot is that place as someone has to pay the light bill.
___Good Luck
___Wayne R. Gerdes
You need to consider a lot of other factors.
That Lexus had to be shipped to the dealer who bought it...figure 700.00.
It had to be detailed, scratches fixed etc..500.00
The mechanical inspection found a few things amiss
1000.00.
It had to be advetised, displayed and it had to contribute to the huge overhead required in order to operate a dealership.
Still, if those profits are possible I should go work there.
BTW, I live quite well, much better that I think you would expect but thanks for your concern.
Terry...what did I miss?
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