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 choices by providing you with interactive financial calculators and tools that provide objective and original content. We also allow users to conduct research and analyze information without cost, so that you can make decisions about your finances without trepidation. Bankrate has agreements with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies who pay us. This compensation could affect how and when products are listed on this site, including for instance, the sequence in which they be listed within the categories of listing in the event that they are not permitted by law. Our mortgage home equity, mortgage and other home loan products. But this compensation does not influence the information we publish, or the reviews you read on this site. We do not cover the universe of companies or financial offers that may be accessible to you. SHARE: Photographee.eu/Getty Images
3 minutes read. Published July 14 2022
Authored by Rebecca Betterton 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 borrowing money to buy cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to control their finances with concise, well-researched and informative information that breaks down complex topics into manageable bites. The Bankrate promises
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We receive compensation for the placement of sponsored products and, services, or when you click on certain hyperlinks on our website. This compensation could influence the manner, place and in what order items appear in listing categories and categories, unless it is prohibited by law. We also offer mortgage, home equity and other products for home loans. Other elements, such as our own rules for our website and whether or not a product is available in your region or within your own personal credit score could also affect how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include the details of every credit or financial products or services. When you’ve negotiated the price of your new vehicle, you may be surprised by a final sale figure of hundreds perhaps even thousands, higher than you originally negotiated. A majority of these additional charges, or the dealer’s fees are imposed by law — like title, tax and licensing fees. However, there are some fees that are entirely dependent on the particular dealer to negotiate . The dealer’s fees that you can cut out and negotiate Not all fees that a dealer offers you is mandatory or non-negotiable. Be ready to turn down unneeded options and negotiate charges for the products you want. The preparation fee for the dealer or vehicle The preparation fee for a dealer or vehicle are extra charges that dealers add to make the vehicle ready for delivery. They include cleaning the car, taking any « bump protectors » off the doors, or taking off the protective covers for the floor or seats. These can be costly in extra dollars, so it’s worth paying attention to. How to avoid: U nless the dealer did something more beyond the basic preparation, do not to pay the dealer charges. Extended warranties and accessories installed by the dealer. These extra items are paid for when you make the sale but only if you requested them and determined that you were paid a fair price for the item or service. These items might include a stolen vehicle recovery system -like LoJack paint sealant, or an aftermarket sound system , or wheels . How to avoid: If a dealer tries in requesting payment for any of these items and you did not request them, decline to pay the cost. If you did ask them, shop around to ensure that you are receiving a fair price since you could purchase all of these items once you own the vehicle. VIN etching or vehicle identification number is the grouping of 17 characters that identify your car. The procedure of VIN etching is done for security purposes. It etchs the number on the windows of the car. It can cost between $150 to $300, so it is recommended to stay clear of this cost and handle the issue on your own. This is among the easiest charges you can avoid. So be sure to plan to keep it from slipping through the cracks in your paperwork . What to do: S ay no to this additional fee and cut costs by going directly to an auto retailer for this service. You can also find a DIY kit online that costs between $20 and $40 . Extended warranty is an additional cost that can cover potential car repairs once the manufacturer’s warranty on the car expires. However, they’re not necessary for every driver. If you’re concerned about the cost of vehicle repairs, it may be wise to rethink the choice of vehicle. And if it is worth it, shop around instead of blindly going with the dealer’s offer. Avoid: be sure to compare the price of this charge against the probability that it will be used prior to approving on it . The gap insurance guarantee, also known as asset protection, or, is an additional fee that you may be met with if you lease a car. It will cover the difference in value of the vehicle and the loan payments if the vehicle is totaled or stolen . The best way to avoid it: even if you have a lengthy loan period and have no money down, this fee should be avoided. Make sure you pay at minimum 20% of your down payment to ensure that it’s unlikely that you be charged financially liable for your loan. Unavoidable dealer costs There are also dealer fees that you will not be in a position to avoid, however you can plan for them . Tax, title and license fees The title and license fees cover the process that requires to obtain an auto title and the license plate. The cost of the tax fee will depend on the state’s sales tax rate and cannot be negotiated . Learn more: To understand the procedures in your state, visit the state’s Department of Motor Vehicles (DMV) website. Documentation fee The documentation fee is the cost for handling all paperwork that comes to a purchase of a new vehicle and is something you will have to pay. Some states charge an annual fee for this fee, but it is generally less than $100. Other states have no specific specifications, meaning that a dealer may charge whatever price they wish. Remember that the amount you pay for will differ based on your state and the dealer you’re working with. To get an idea of what’s typical, look up local laws. Cost of destination This charge covers the cost that it costs the dealer to pick up the vehicle out of the manufacturer. Kelley Blue Book notes that the cost can be upwards of $1700. According to Edmunds the process of the time you pick up your car at the factory won’t help you pay the cost of delivery and you’ll be charged the entire amount. It is a fact that this charge cannot be changed and could be an expensive portion of your cost. The bottom line: While there are some dealership charges that are inevitable Knowing which fees can be negotiated or removed completely is essential to saving money on your next car-buying experience. And before you enter the showroom, do some study and calculations ahead of time to better comprehend .
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The article was 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. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are enthusiastic about helping readers gain confidence to take control of their finances through providing clear, well-researched details that cut otherwise complex topics into manageable bites.
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