When Buying a Car, Price Before TT&L is Meaningless

I recently went car shopping, and along the way I got quotes from several different dealers. I collected three quotes that included price before TT&L and price after TT&L. After looking at the numbers, all I can say is that the price after TT&L is the only price that matters or means anything. (TT&L stands for tax, title, and license, but as you'll see, that's not all that it includes.)

Here's the raw data:

Vehicle Total w/o TT&L Total Dealership Notes
2018 Hyundai Elantra Limited $18,695.20 $20,250.33 Huffines Hyundai McKinney
2017 Chevy Cruze Premier $20,176 $21,774 Clay Cooley Chevrolet Dallas
2017 Ford Focus Titanium $19,891 $22,273.70 Bob Tomes Ford financing required

My Real Experience

I ended up buying the Elantra in the list above. My TT&L broke down as follows:

  • State Motor Vehicle Tax: $1,168.45
  • Documentary Fee: $150
  • Deputy Service Fee: $5
  • Government License and/or Registration Fee: $186
  • Dealer's Inventory Tax: $38.68
  • Government Vehicle Inspection Fee: $7
  • TT&L Total: $1,555.13

It should be noted that on my vehicle's invoice, the dealer's inventory tax line item has the note "A dealer's inventory tax charge is intended to reimburse the dealer for ad valorem taxes on its motor vehicle inventory. The charge, which is paid by the dealer to the county tax assessor-collector, is not a tax imposed on a consumer by the government, and is not required to be charged by the dealer to the consumer.

How Much Should TT&L Cost?

Let's assume that all dealers charge the dealer inventory tax and just lump it in with the state motor vehicle tax. Putting those two together gives a tax rate of 6.46%. Let's also assume all dealers have to pay the same fixed costs and lump together the documentary fee, deputy service fee, registration fee, and inspection fee. That's a flat cost of $348.

Using those two numbers, we should expect the price of a car before TT&L and the price after TT&L to roughly follow the formula below:

P_total = P_subtotal * 106.46% + $348

Let's try it out on the car I bought and see if it works out:

$20,250 = $18,695.20 * 106.46% + $348

$20,250 = $20,250.91

Okay, it's not perfect, but it's pretty close. It's not right because I don't know exactly how the dealer inventory tax is calculated, and some dealers might or might not charge it. I'd think the error on this calculation should be less than $100 though. On a $20,000 vehicle that's an error of about 0.5%. Not bad.

How Much Does TT&L Really Cost?

Okay, let's apply this formula to the quotes I got:

Vehicle Total w/o TT&L Expected Total Quoted Total Error Dealership
2018 Hyundai Elantra Limited $18,695.20 $20,250.91 $20,250.33 -$0.58 Huffines Hyundai McKinney
2017 Ford Focus Titanium $19,891.00 $21,523.96 $22,273.70 $749.74 Bob Tomes Ford
2017 Chevy Cruze Premier $20,176.00 $21,827.37 $21,774.00 -$53.37 Clay Cooley Chevrolet Dallas

The Cruze numbers seem reasonable. Being off by $53 might just mean that dealer doesn't charge the dealer inventory tax. Okay, I'm on board with that price. However, that Focus price seems odd.

Shame on You, Bob Tomes Ford

Finally, what's up, Bob Tomes Ford? Seriously? Bob Tomes Ford was without a doubt the fishiest dealership I visited while car shopping. When I negotiated with them, the salesman went back and talked to the finance guys three separate times and always came back without the same price.

Also, the price that they showed me was only good if I financed the car through them at a rate of 5.99% APR for 60 months! If I paid cash, then they claimed I would lose thousands in rebates. (I searched "car loan calculator" on Google and punched in the numbers. The total price had I used their loan would have been $25,831. That's $3,557.30 in interest! Even if I had lost $3000 in rebates by paying cash, I still could have come out ahead just by doing the math myself at home. They knew this, and as you'll see in the next paragraph, they didn't want me to figure that out.)

The sheet they showed me with the price on it didn't make any sense to me, so I wanted to take it home and study it a little bit more. I asked if I could take the quote home with me to think it over, and the salesman said no because it had a customer's personal information on it! That was my personal information! Obviously that was a lie that they just didn't want their terrible pricing tricks getting out in public.

Now I've finally gotten around to looking more closely at the two numbers that I had written down in my phone while at Bob Tomes Ford, and they make even less sense! Why is the TT&L portion so much higher? Clearly Bob Tomes Ford is looking to make as much profit off their customers by any means necessary. There's no way to explain why the TT&L portion of their cost is so much higher than all of the other dealerships.

Don't Worry About Anything Besides the Out-the-Door Price

If there's one thing you should take away from this, it's that nothing matters besides the final price you pay to the dealer. Dealers love to quote you great prices without TT&L to get you hooked. The only problem with that is there are no laws restricting the fees they can tack on in TT&L They can do whatever they want when setting that price, and you have to take it. Well, you have to take it unless you're smart and asked for the total out-the-door price up front.

Photo by Kevin Cabral