Dealer fees: What to know and how to avoid them Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial decisions by offering interactive financial calculators and tools, publishing original and objective content. This allows you to conduct research and analyze information for free – so that you can make your financial decisions without trepidation. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this website are provided by companies that pay us. This compensation could affect how and when products are listed on this website, for example the order in which they appear in the listing categories, except where prohibited by law. Our mortgage home equity, mortgage and other products for home loans. This compensation, however, does have no impact on the content we publish or the reviews that appear on this website. We do not contain the entire universe of businesses or financial offers that may be available 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 to navigate the ways and pitfalls of borrowing money to buy cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances by providing precise, well-studied information that breaks down otherwise complex topics into manageable bites. The Bankrate promise
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We are compensated for the promotion of sponsored goods andservices or through you clicking certain hyperlinks on our site. Therefore, this compensation may influence the manner, place and when products appear in listing categories in the event that they are not permitted by law. This is the case for our mortgage home equity, mortgage and other home lending products. Other factors, such as our own rules for our website and whether the product is available in the area you reside in or is within your own personal credit score could also affect the way and place products are listed on this site. While we strive to provide an array of offers, Bankrate does not include details about each credit or financial product or service. When you’ve negotiated the price of your new car, you might be shocked to see a final sales figure that is hundreds, or even thousands of dollars higher than what you originally agreed upon. A majority of these additional costs, also known as charges imposed by dealers, are mandated by law like title, tax and licensing fees. But some fees are completely dependent on the particular dealer and can be negotiated . The dealer’s fees that you can cut out and negotiate Not every cost a dealer throws your way is non-negotiable or mandatory. Make sure you are ready to refuse unnecessary options and haggle the costs of the items you want. Dealer or vehicle preparation fees Vehicle or dealer preparation fees are additional charges that dealers add to make the car prepared to be delivered. These include washing the car, removing the “bump protectors” off the doors, and taking off the protective covers for the floor or the seats. This can cost hundreds of extra dollars, so it’s worth paying attention to. How to avoid: U nless the dealer did something more above the normal preparation process, you should not be forced to pay these fees. Dealer-installed accessories and extended warranties These extra items are paid for when you make the sale, but only if they are requested by you. them and determined that you are being given a fair cost for the product or service. These items might include the stolen vehicle recovery device- like LoJack paint sealant, or an aftermarket sound system or wheels . How to avoid: If a dealer tries to charge you for any of these products and you didn’t request these items, you should not pay the associated fee. If you did ask these items, do some research to make sure you’re paying a fair amount since you can obtain all of these items once you own the vehicle. VIN etching which is also known as the vehicle’s identification number is the grouping of 17 characters which identify your car. The procedure of VIN engraving is performed to ensure security. The number is etched onto the windows of the car. It could cost anywhere between $150 and $300, which is why it’s wise to avoid this additional expense and manage it yourself. It’s one of the easiest fees to avoid, so be sure to be prepared to ensure that it doesn’t slip through the paperwork cracks . Tips to avoid it the cost: Say no to this additional fee and save money by going directly to the body shop for this service. You can even find DIY kits online that costs between $20 and $40 . Extended warranty is an additional fee that can cover potential car repairs after the manufacturer’s warranty on the vehicle expires. But they aren’t necessary for all drivers. If you’re worried about the price of possible vehicle repairs, it may be wise to rethink the you’ve chosen to purchase. And if it is worth the cost, consider other options instead of going blindly with the dealer’s offer. What to do: increase the amount of this cost against the probability that it will be used prior to approving on it . Insurance for gap gaps Guaranteed Asset Protection, or , is an extra fee that you may be met with if you are leasing a car. It covers the difference between the price of the car and loan payments in the event that the vehicle is stolen or totaled . What to do: nless you have a long loan term and put no cash down, this charge is one you must avoid. Make sure you pay at minimum 20% of your down payment to ensure that it’s unlikely that you be charged on your loan. Unavoidable dealer charges There are also dealer fees that you will not be able to avoid, but you can prepare for them . Tax, title and license fees The license and title fees cover the process that it takes to get an auto title as well as the license plate. The cost of the tax amount will be based on the sales tax rate in your state’s rate and cannot be negotiated . Learn more: To understand the process for your state, go to the state’s Department of Motor Vehicles (DMV) website. Documentation fee: The document fee covers the cost of handling all paperwork that comes with a new car purchase and is the amount you be required to pay. Some states will charge a flat fee for this fee, but it is generally under $100. Other states have no particular rules, which means that dealers can charge whatever it wants. Takeaway: What you’ll pay will depend on your state and the dealer you’re working with. For a better understanding of the standard price, check out local laws. Cost of destination This charge is the amount is required by the dealer to get the car out of the manufacturer. Kelley Blue Book notes that these charges can cost as high as $1,700. According to Edmunds that, picking up your vehicle at the factory will not save you the delivery fee — you’ll likely still have to pay the full amount. Takeaway: This fee cannot be reduced and is a hefty part of the bill. The bottom line Although certain dealership fees are inevitable, knowing which can be negotiated or removed altogether is the key to saving money in the next time you buy a car. Before you step into a showroom , conduct some research and math before you go to know .
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the details of borrowing money to buy a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances by providing concise, well-researched, and well-written information that breaks down complex subjects into bite-sized pieces.
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