Did I get cheated by my Toyota dealer? (TAVT calc Q) (sales, loan)

[tjrcs]

I recently purchase a Toyota from a deal up in north metro area. When I made the new car purchase, I traded-in my old vehicle as their offer price was pretty fair. All the processes went fairly well until when we got to the calculation of Title Ad Valem Tax (TAVT). Here are some basic info of my deal:

Sales price of new vehicle: $39,000
Trade-in value: $19,500
Deal doc fee: $699
TTL: $41

I also requested to cash-out $10,000 equity from the traded-in car. This is the root of where the confusion started.

For the calculation of FMV for TAVT, the dealer added $10,000 equity check amount to the sales price. Then, they deducted $19,500 of my trade-in value. Based on this calculation, the dealer calculated FMV as $29,500 (= $39,000 + 10,000 - 19,500).

Is this right way? In my opinion, FMV should be $19,500 (=$39,000 - 19,500). Regardless how much money I take out from my equity of old traded-in car, this should not affect the FMV of my new vehicle. The dealer GM kept insisting that this is how they calculate all the time. With a baby crying next to me, I just signed the bill of sale with the dealer's TAVT calculation and left the dealer lot with the new Toyota.

So.. did I get cheated by my Toyota dealer or was the dealer right?

[neil0311]

I guess one important point/variable is whether or not your trade in ACTUALLY was worth $19,500. Many times the dealer will write up your trade at whatever number you want, and then simply add the negative equity back to the top line.

In any event....I'm not a CPA, but here's how I break it down.....they gave you $49,000 of cash and goods. You gave them $19,500 of goods in trade (assuming it was actually worth that much). So the net purchase price of the new car was actually $39,000 - $9,500 trade = $29,500 purchase. That is what I would calculate the net purchase price as for taxes.

You took the $10,000 out of the transaction. It's no different than if you went and sold your car for $19,500 to a private party, put $10,000 in your pocket, and then went and put $9,500 down on a new car being sold at $39,000. Net sales price is $29,500. Simple math.

[tjrcs]

Neil - Thanks for your thoughts. My trade-in value seems fair considering that KBB value ranged between $19k-21k. Also, the outstanding loan balance was approx. $9k at the sales, so it was not like I took out $$ of negative equities..

According to the Georgia's TAVT, I should get the full deduction for the trade-in value. Hence, my Q is around how to calculate FMV of my new vehicle. For the dealer or to the government, it shouldn't matter how I use the proceeds from my trades. I can use them toward the new car, pay off the outstanding loan balance of old traded-in vehicle, or cash-out the equities into my pocket. My concern is why the dealer "raised" the sales price by the amount that I took out from the equities of traded-in vehicle... I feel like I became $650 poor from this.

[neil0311]

Originally Posted by tjrcs

According to the Georgia's TAVT, I should get the full deduction for the trade-in value.

Right, but you took $10K out of the transaction in cash. Your trade in was only $9,500, so your net price for the new car was $29,500, at least that's how I see it, and I'm not a CPA or expert on retail taxes.

Did you ask the dealer?

[Saintmarks]

I cannot comment on Georgia laws regarding taxes and how they are calculated vs. you cashing in on equity in your trade. I n Texas I don't think it would matter, it is your choice to put it toward the new car or use it how you want.

However, I would have questioned a $699 doc fee. A doc fee is going toward the dealer's overhead of doing the work to register your car, get your plates, pay the taxes, etc. etc. They do need some recompense for this, they have full time staff that do nothing but title cars and care for this paper work so you don't have to take off work going from place to place and standing in long lines. But $699? My dealership here in Texas charges $180.

[jfl122]

Doc fee run from a low of $99 to $399 anything $400 and up is too high average probably falls 279 to 349 some states cap
the doc fee. JL Massachusetts