First car purchase. Trying to make sense of it all.

[ghostman]

Hey everyone,

I posted this on a different car-related forum hoping to get advice, but there are no biters there. Would anyone be able to help me out here?
---

I live in the city and never needed a car, but will be starting grad school in an area where a car is essential. I'm leaning towards a 2012 RAV4, but I'm confused at how to approach this purchase. I plan to pay cash, all upfront. I think I've done quite a bit of research with truecar, edmunds, etc. and this is what I've determined.

2012 Toyota RAV4 4WD 4dr I4
(from TrueCar.com)
Base: $22,487
Holdback: -$481
Regional Ad Fees: $413
Destination Fees: $810
Customer Incentives: -$750 (expires May 31)
Total Dealer Cost: $22,479

Factory Invoice: $23,710
Market Average: $23,471
MSRP: $24,860
NYC Sales Tax: 8.875%

Edmunds Special Offer: $750 Rebate
Toyota RAV4 Incentives and Rebates

Toyota College Graduate Program: $1000 Cash Back
Toyota Financial Services

I have a few questions. If anyone can even answer some of these, it'll really help me make sense of things.

1. I notice everyone mentioning the $750 customer incentive. TrueCar took it off the base price to calculate dealer cost. When I negotiate the price is this something they automatically apply? Do I have to insist on getting it? And is this a price I have to pay out first, then get the money back later on (like a rebate)?

2. Is the Edmunds $750 Rebate special offer referring to this customer incentive, or is this an additional $750 off? I understand this is a rebate that I claim after purchasing the car.

3. Some sites still refer to a $1000 cash back, but I'm not sure if this is just old April data. Is there a $1000 cash back?

4. Does anyone know if the college grad cash back ($1000) stacks on top of everything? Again, is this something I'll pay up front, then get the money back. Or is this taken off the price before I pay (thus, dealer cost is actually $22,479-$1000=$21,479)? Also, I'm a new grad student starting in August. Does the acceptance letter count as enrollment?

5. What fees are legit and cannot be waived? Document fees? Regional ad fees? Delivery fees?

6. What's an appropriate offer that doesn't shoot myself in the foot, but is low to a point where they will still take me seriously? Does this offer include fees and taxes? Or do I generally request a quote and work from there?

7. Edmunds is expecting the 2013 RAV4 data to launch in spring (around now?). Is now a good time to buy the 2012 RAV4, or are prices expected to drop?

Ideally, I'd like to get the RAV4 4WD base model for under $25,000 after taxes and fees. Preferably below $24,000. Is this unreasonable? It sounds like the dealer cost (assuming the incentive and college grad program discounts and including the ad/destination fees) should be $21,479. Assuming a 5% profit for the dealership, it's $22,552. With NYC tax, it's $24,554. With the $750 Edmunds rebate, it's $23,804.

Am I doing it wrong?

 

[NutBucket]

What I would do:

Go to the websites for you local dealers and see what they have on the lot. When you find something you like, request a quote. See what they offer you and go from there.

Truecar is pretty decent but funny thing about it. Last week I was looking at pricing for an Acura MDX. Changing the zip code (about 10 miles difference geographically) added in a dealer incentive. Changed the city but still in the same county. Makes no sense to me but whatever.

 

[Sid59]

What I would do:

Go to the websites for you local dealers and see what they have on the lot. When you find something you like, request a quote. See what they offer you and go from there.

Best way to do it. OP already has a base for what the car would cost. That's just the beginning.

Hit the website, send emails, and do your follow-up. Pick a price a stick with it.

Good luck.

 

[vshah]

if you can find a few dealers with the same model in stock, take the lowest price to the others, rinse & repeat.

 

[rh71]

internet age = call each dealer and ask for the internet sales department... they give you straight up numbers with no haggling... mention XYZ dealer gave you this number after rebates (verify them)and see what they can do after that... take the best price. You shouldn't need to even hit the showroom floor if you've already decided your car/options.

other advice: http://www.carbuyingtips.com

 

[exar333]

if you can find a few dealers with the same model in stock, take the lowest price to the others, rinse & repeat.

This. NEVER take the first deal you find. Shop at least 4-5 dealers and pick the best quote you get. Try to get the deal in writing (internet manager email, etc) and this can then be used to negotiate (potentially) better deals elsewhere. There should be plenty of models of the car you chose, so finding one very close, or exactly what you want, should be pretty easy.

 

[NutBucket]

I actually got burned on that one when buying my CR-Z. I forgot how full of themselves Honda dealers are. Turns out the first dealer really was the best. Oh well.

 

[mvbighead]

What I would do:

Go to the websites for you local dealers and see what they have on the lot. When you find something you like, request a quote. See what they offer you and go from there.

Truecar is pretty decent but funny thing about it. Last week I was looking at pricing for an Acura MDX. Changing the zip code (about 10 miles difference geographically) added in a dealer incentive. Changed the city but still in the same county. Makes no sense to me but whatever.

Definitely this. OP, you know what price you are looking for. You know that it should be fairly close to reality. Get quotes, and find the one that gets there. If no one does, starting badgering and mentioning the specifics of the rebates, etc. Best bet is to get some quotes and go from there.

You've already got step 1 done, now just move on to step 2. At least you know what should be considered a fair deal.

 

[waffleironhead]

4. Does anyone know if the college grad cash back ($1000) stacks on top of everything? Again, is this something I'll pay up front, then get the money back. Or is this taken off the price before I pay (thus, dealer cost is actually $22,479-$1000=$21,479)? Also, I'm a new grad student starting in August. Does the acceptance letter count as enrollment?

The program is for new college graduates...those graduating right now. It isnt for those heading to grad school.

The $1000 is taken off the top at the end after taxes.

 

[NAC]

I'm unsure how taxes work - but you might be able to buy in NJ and save on sales tax. It is also possible that NY DMV will charge you sales tax since you tried to avoid paying NY tax.

But as others have said - shop around. I would suspect that dealers in the suburbs have lower overhead, need to compete more for customers, and can give better prices.

 

[ghostman]

Thanks. I've learned a bit more since my post.

Regarding the college graduate program, no dealership seems completely familiar with it. The toyota financial services websites indicates "Be enrolled in an accredited graduate degree program or have received a degree from an accredited graduate program during the last two years," which made it sound like being enrolled in a graduate degree program was sufficient. Most dealerships only seem to refer to the part about having graduated already. Some places also say it's only meant for financing/leasing, not straight cash purchase. So it seems I'm not qualified, which just might blow my $25,000 budget for this.
http://www.toyotafinancial.com/consumer/tfs.portal?_nfpb=true&_pageLabel=pg_CollGradFinProg

Also, as waffleironhead confirms, the discount is taken AFTER taxes in NY.

As for buying from NJ, they will still charge NY taxes. It's based on where you register the car. Plus, NJ has no limit on document fees. NY has a $75 limit.

I will take the advice here and contact multiple dealerships. See if I can manage below $25K. If not, I'm probably going to go for used.

To be honest, I prefer the 2012 Honda CRV. But that's out of my budget as it has no incentives.

 

[NutBucket]

I'd say buy used but there's really no reason to with resale values being so high.

 

[Viper GTS]

The one thing I would do differently than you've already done is not burn cash when financing is available for so incredibly cheap.

With sub 2 percent financing available (and likely 0) you would be nuts to burn $20k+ in cash on anything.

Btw this the 3rd time I have written this complete post, apparently tapatalk will truncate your post if you string together a greater than symbol, the number 2, and a percent symbol.

Viper GTS

 

[Rumpltzer]

When I went to buy my first new car, I read the Edmund's "prices paid and buying experience" forum for the model that I was interested in. I knew the invoice price and incentives, and then I simply sent emails to five Honda dealerships asking for a breakdown on the "out the door" (otd) price on the specific car that I wanted.

The numbers I got back were lower than I expected. I made an appointment, showed up, drove the car, filled out the paperwork, and I was out in less than an hour.

Also, 5% profit over invoice and delivery is generous. Something in the 2-3% is fine, but why don't you just send out the emails and see what you get back on the prices?

 

[A5]

The one thing I would do differently than you've already done is not burn cash when financing is available for so incredibly cheap.

With <2% financing available I would not be burning $20K+ in cash for any reason.

Viper GTS

Yeah. I just got a Mazda 3 with 0.9% - making the payment sucks, but I can throw the cash in a 3-year CD and make more than that back no problem.

 

[nerp]

Put $10,000 down, finance the rest. You'd be dumb to pay for the whole thing up front in cash. You can end up with no depreciation hit if you do a trade a few years from now based on incentives and $10,000 is chump change for a car loan, especially at today's rates (which can be 0 sometimes).

 

[heymrdj]

The one thing I would do differently than you've already done is not burn cash when financing is available for so incredibly cheap.

With sub 2 percent financing available (and likely 0) you would be nuts to burn $20k+ in cash on anything.

Btw this the 3rd time I have written this complete post, apparently tapatalk will truncate your post if you string together a greater than symbol, the number 2, and a percent symbol.

Viper GTS

This.

Put $10,000 down, finance the rest. You'd be dumb to pay for the whole thing up front in cash. You can end up with no depreciation hit if you do a trade a few years from now based on incentives and $10,000 is chump change for a car loan, especially at today's rates (which can be 0 sometimes).

And This.

Don't tie up all your liquidity. You can make monthly payments in an emergency, sometimes you need cash now. 😉

 

[ghostman]

Put $10,000 down, finance the rest. You'd be dumb to pay for the whole thing up front in cash. You can end up with no depreciation hit if you do a trade a few years from now based on incentives and $10,000 is chump change for a car loan, especially at today's rates (which can be 0 sometimes).

I'll admit my ignorance here. I'm not completely sure what this means. To be honest, I've always ignored the financing options because I was just looking to pay it all to avoid interest.

EDIT: I should point out that I currently do not have any debt and will not be taking on loans for grad school. I currently have safe, low yield investments because I need to draw upon my savings for grad school. So, my money wasn't really working for me elsewhere.

I'm mostly confused with the "no depreciation hit if you do a trade a few years from now" comment. I would be sharing this car with my gf, but there's a strong likelihood that we'll need a second car in 2 years.

 

[Viper GTS]

I'll admit my ignorance here. I'm not completely sure what this means. To be honest, I've always ignored the financing options because I was just looking to pay it all to avoid interest.

EDIT: I should point out that I currently do not have any debt and will not be taking on loans for grad school. I currently have safe, low yield investments because I need to draw upon my savings for grad school. So, my money wasn't really working for me elsewhere.

I'm mostly confused with the "no depreciation hit if you do a trade a few years from now" comment. I would be sharing this car with my gf, but there's a strong likelihood that we'll need a second car in 2 years.

Financing is nearly free right now at worst (1.99% at PenFed on new AND used cars) or literally free in many cases on new cars (0%). Keep your cash invested and schedule automatic payments every month to cover the car payment. In either case, assuming <2% you're better off using the money some other way vs dumping it all into a car. Whether that 'better off' is because you're making interest on the money you've borrowed at 0% or because you have cash should the shit hit the fan only time will tell, but cash > paid off car.

The lack of depreciation is because used cars are worth so much right now. In many cases buying used saves you virtually nothing. Who knows if that will still be the case a few years from now, but right now buying new is frequently the better deal.

Viper GTS

 

[NutBucket]

Exactly what Viper said.

 

[power_hour]

I like the RAV4 but its time is done. The weak link is the tranny and engine. This 4 banger gets pretty bad gas mileage and passing power on the highway is terrible. Resale and reliability is awesome. Interior sucks.

I see many, many used RAV4s for sale. Get a used V6 Limited and bargain hard. The base is not very good.

 

[nerp]

Yeah. Your new car in two years will fetch a nice price from the dealer and they'll tack on incentives, rebates, and other stuff to make whatever loss you'd get on the sale go away. In the end your payments stay the same or drop, you get a brand new car and you haven't had to put any money down. Or your payments are less.