Dealer fees: What to know and how to avoid them Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by providing you with interactive financial calculators and tools as well as publishing authentic and objective content. We also allow you to conduct your own research and compare data without cost, so that you can make decisions about your finances with confidence. Bankrate has partnerships with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site come from companies who pay us. This compensation can affect the way and when products are featured on this website, for example, for example, the order in which they may be listed within the categories of listing, except where prohibited by law. This applies to our mortgage or home equity products, as well as other home lending products. This compensation, however, does have no impact on the content we publish or the reviews that you see on this site. We do not contain the vast array of companies or financial deals that could be open to you. SHARE: Photographee.eu/Getty Images
3 min read Published July 14 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of taking out loans to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain the confidence to take control of their finances with concise, well-researched and informative facts that break down complicated topics into bite-sized pieces. The Bankrate promises
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So, this compensation can affect the way, location and in what order items appear within listing categories and categories, unless it is prohibited by law for our mortgage or home equity products, as well as other home loan products. Other factors, such as our own website rules and whether a product is available in your region or within your self-selected credit score range could also affect how and where products appear on this site. Although we try to offer the most diverse selection of products, Bankrate does not include the details of each credit or financial product or service. When you’ve negotiated the price of your car you could be shocked to see a final sales figure that is hundreds, perhaps even thousands of dollars higher than what you originally agreed upon. A majority of these additional charges, or the dealer’s fees are mandated by law like title, tax and licensing fees. But some fees are completely dependent on the dealer and are negotiated . Fees for dealers you can eliminate and negotiate Not every cost that a dealer offers you is a requirement or cannot be negotiated. Be prepared to reject unnecessary options and haggle the charges for the products you’re interested in. The preparation fee for the dealer or vehicle The preparation fee for a dealer or vehicle are extra charges that the dealer charges to make the car prepared to be delivered. They include cleaning the car, taking any “bump protectors” off the doors, and taking off the protective covers for the floor or the seats. It could cost hundreds of additional dollars, and is worth being aware of. Tips to avoid it: U nless the dealer did something more beyond basic preparation, refuse to pay these charges. Extended warranties and accessories installed by the dealer. These extras are payable during the sale however, only if you have requested them and determined that you’re being given a fair cost for the item or service. They could include the stolen vehicle recovery system- like LoJack paint sealant, or an aftermarket sound system , or wheels . How to avoid when a dealer attempts at charging you for any of these items and you did not ask for these items, you should not pay the associated fee. If you did ask for them, shop around to ensure that you are receiving a fair price since you can get all of these items when you own the vehicle. VIN etching VIN, also known as a vehicle’s identification code is the combination of 17 characters that identify the car. The process of VIN engraving is for security purposes. It etches the number onto the windows of the car. The cost can range from $150 to $300, so it is recommended to avoid this additional cost and tackle it on your own. It’s one of the easiest charges you can avoid. So be certain to prepare to ensure that it doesn’t slip through the paperwork cracks . How to avoid the cost: Say no to this additional fee and cut costs by going directly through a body retailer for this service. You can also find a DIY kit online that costs between $20 and $40 . Extended warranty: This is a cost-per-hour that can cover potential car repairs once the manufacturer’s warranty on the vehicle expires. However, they’re not necessary for every driver. If you are worried about the cost of vehicle repairs, it may be prudent to reconsider your choice of vehicle. And if it is worth the cost, consider other options instead of blindly going with the dealership’s offer. Avoid: ompare the cost of this cost against the likelihood that it will actually be utilized prior to signing on it . Gap insurance Guaranteed asset protection, or , is an additional cost that you could encounter if you lease a car. It covers the difference between the price of the car and loan payment if the car is stolen or totaled . What to do: If you’re on a long loan period and have no money down, this cost is one you must avoid. At minimum 20% of your down payment to ensure that it’s unlikely for you to be charged on the loan. Unavoidable dealer fees There are also dealer fees that you will not be at a disadvantage, but you can prepare for them . Tax as well as title and license costs The fees for title and license will cover the procedure it takes to get the title to your vehicle as well as the license plate. The price tag attached to the tax rate will be contingent on your state’s sales tax rate and cannot be negotiated . Takeaway: T o learn the procedure for your state, go to your state’s Department of Motor Vehicles (DMV) website. Documentation fee: The document fee is the cost for processing all the paperwork associated with the purchase of a car and is something you will need to pay. Some states charge the fee in one lump cost, which is usually less than $100. Other states have no specific specifications, meaning that a dealer may charge whatever price they wish. Takeaway: What you’ll pay will depend on the state you live in and the dealer you deal with. For a better understanding of the standard price, check out local laws. Destination fee This fee covers the cost that it takes for the dealership to get the car out of the manufacturer. Kelley Blue Book notes that these charges can cost upwards of $1700. According to Edmunds, the time you pick up your car at the factory will not save you the delivery fee as you’ll be charged the full amount. It is a fact that this charge cannot be negotiated and will be an expensive portion of your total cost. The bottom line is that while some additional dealership fees are necessary but knowing which ones are negotiated or eliminated altogether is the key to making savings on your next car-buying experience. And before you enter the showroom, do some research and math prior to your visit to better know .
This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the details of taking out loans to buy cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are enthusiastic about helping readers gain confidence to control their finances with precise, well-researched and reliable information that breaks down otherwise complex topics into manageable bites.
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