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 better financial choices by offering interactive financial calculators and tools, publishing original and objective content. This allows users to conduct research and compare information for free – so that you can make decisions about your finances without trepidation. Bankrate has agreements 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 listed on this site, including for instance, the order in which they appear in the listing categories and other categories, unless prohibited by law. Our mortgage, home equity and other products for home loans. But this compensation does have no impact on the information we provide, or the reviews that you read on this site. We do not contain the vast array of companies or financial offers that may be available to you. SHARE: Photographee.eu/Getty Images
3 minutes read. Published July 14 2022
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances with concise, well-researched and informative facts that break down complicated topics into bite-sized pieces. The Bankrate guarantee
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Therefore, this compensation may affect the way, location and in what order products appear in listing categories in the event that they are not permitted by law. This is the case for our mortgage or home equity products, as well as other products for home loans. Other factors, like our own rules for our website and whether a product is available in the area you reside in or is within your personal credit score can also impact the way and place products are listed on this website. While we strive to provide the most diverse selection of products, Bankrate does not include information about each credit or financial item or product. When you’ve negotiated the price of your new car, you could be shocked to see a final sales amount which is hundreds or maybe even thousands more than what you originally agreed upon. The bulk of these additional costs, also known as the dealer’s fees are required by law — for example, taxes, title and license fees. However, there are some fees that are entirely up to the individual dealer and are negotiated . Dealer fees you can avoid and negotiate Not all fees a dealer throws your way is a requirement or cannot be negotiated. Be ready to turn down unneeded options and negotiate fees on the products you want. Vehicle or dealer preparation fee The preparation fee for a dealer or vehicle are additional charges that dealers add to make the vehicle ready for delivery. This includes washing the car, removing the « bump protectors » off the doors, and taking off the protective covers for the seats or floor. It could cost hundreds of extra dollars, so it’s worth paying attention to. Tips to avoid it: U nless the dealer has gone above and beyond basic preparation, refuse to pay the dealer charges. Accessories and extended warranties installed by dealers. These additional items are payable during the purchase, but only if you requested these items and were able to prove that you’re being paid a fair price for the product or service. This could be an unintentionally stolen vehicle recovery system — like LoJack paint sealant or an aftermarket system for sound or wheels . Avoiding the problem If a seller tries at charging you for any of these items , and you did not request these items, you should not pay the associated fee. If you did ask the items, you should shop around to ensure that you are receiving a fair price since you can obtain all of these items after you own the car. VIN etching or vehicle identification number is the collection of 17 characters that identify the car. The process of VIN etching is done to ensure security. It etches the number onto the windows of the car. It can cost between $150 and $300, which is why it is recommended to avoid this additional cost and tackle it on your own. It’s one of the most straightforward fees you can avoid. So be sure to be prepared to ensure that it doesn’t slip through the paperwork cracks . What to do Say no to this fee and save money by going directly to an auto retailer for this service. There is even DIY kits online for around $20 to $40 . Extended warranty is an additional cost which can be used to cover any potential repairs after the manufacturer’s warranty for the vehicle expires. But they aren’t necessary for everyone. If you’re concerned about the cost of vehicle repairs, it may be a good idea to reconsider the you’ve chosen to purchase. And if it is worth it, do some research instead of blindly going with the dealership’s price. Avoid: increase the amount of this cost against the likelihood that it will be utilized prior to signing on it . Gap insurance Guaranteed asset protection, or , is an extra cost you might be charged if are leasing a car. It covers the difference in value of the car and loan payments in the event that the vehicle is stolen or totaled . How to avoid: U If you’re on a long loan term and put no money down, this fee is something you should avoid. Pay at minimum 20% of your down payment to ensure that it is unlikely that you become financially liable for your loan. Unavoidable dealer costs There are dealer charges that you won’t be at a disadvantage, but you can prepare yourself for them . Tax, title and license fees The fees for title and license are the cost for the process requires to obtain the title to your vehicle as well as the license plate. The cost associated with the tax fee will depend on the state’s sales tax rate. It is not negotiable . Learn more: To understand the procedures for your state, go to your state’s Department of Motor Vehicles (DMV) website. Documentation fee: The document fee is the cost for handling all paperwork that comes with a new car purchase and is something you will need to pay. Some states charge an annual fee for this cost, which is usually under $100. Some states do not have any specific specifications, meaning that a dealer is free to charge whatever they want. The amount you’ll pay will depend on the state you live in and the dealer you’re working with. For a better understanding of the standard price, check out local laws. Destination fee This fee covers the cost that it costs the dealer to take the vehicle out of the manufacturer. Kelley Blue Book notes that the cost can be as high as $1,700. According to Edmunds, picking up your vehicle at the factory won’t help you pay the delivery fee as you’ll be charged the full amount. Takeaway: This fee cannot be negotiated and will be an expensive portion of your total cost. The bottom line is that while some additional dealership fees are unavoidable but knowing which ones are negotiated or eliminated altogether is the key to saving money when it comes to your next car purchase. And before you enter the showroom, do some research and math before you go to know .
Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ways and pitfalls of taking out loans to buy an automobile. 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 take control of their finances through providing clear, well-researched information that breaks down complex topics into manageable bites.
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