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 smarter financial decisions by providing you with interactive tools and financial calculators that provide objective and original content. We also allow you to conduct research and compare information without cost, so that you can make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this site are from companies that pay us. This compensation may impact how and when products are featured on the site, such as for instance, the order in which they may appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage home equity, mortgage and other products for home loans. This compensation, however, does not influence the information we publish, or the reviews you see on this site. We do not contain the entire universe of businesses or financial offerings that might 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 is a specialist in helping readers to navigate the details of borrowing money to buy an automobile. Edited 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 the confidence to manage their finances through providing precise, well-studied information that breaks down complicated subjects into digestible pieces. The Bankrate promises
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So, this compensation can affect the way, location and in what order items appear in listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other elements, such as our own rules for our website and whether the product is available within your region or within your own personal credit score could also affect how and where products appear on this website. We strive to provide a wide range offers, Bankrate does not include details about every credit or financial products or services. Once you negotiate the price of your new car, you may be surprised to see a final sales amount that is hundreds, or even thousands, higher than what you originally agreed upon. Most of these extra fees, also called charges imposed by dealers, are mandated by law, for example, taxes, title and licensing fees. But some fees are completely dependent on the particular dealer and are negotiated . Dealer fees you can avoid and negotiate Not all fees that a dealer offers you is mandatory or non-negotiable. Make sure you are ready to refuse any unnecessary options and bargain the costs of the items you’re looking for. Vehicle or dealer preparation fee Vehicle or dealer preparation fees are charges dealers add to make the car prepared to be delivered. These include cleaning the car, removing all « bump protectors » off the doors, and taking off the protective covers for the seats or floor. These can be costly in additional dollars, and is worth paying attention to. Tips to avoid it: U nless the dealer has gone above and beyond basic preparation, refuse to pay these dealer charges. Accessories and extended warranties installed by dealers. These extra items are payable during the sale however, only if you have requested them and found that you’re being given a fair cost for the item or service. This could be a stolen vehicle recovery device- like LoJack paint sealant or an aftermarket sound system or wheels . How to avoid If a seller tries in requesting payment for one of these items and you did not request them, refuse to pay the cost. If you did request them, shop around to make sure you’re paying a fair amount since you could purchase the items once you own the vehicle. VIN etching VIN, or vehicle identification number is the combination of 17 characters which identify the car. The procedure of VIN engraving is to protect yourself. It etchs the number on the car’s windows. It can cost between $150 to $300, so it is recommended to avoid this additional cost and tackle it yourself. It’s one of the easiest charges you can avoid. So make sure to plan to prevent it from falling through the cracks in your paperwork . How to avoid: S ay no to this additional fee and save money by going directly through a body retailer for this service. There is even an online DIY kit that costs between $20 and $40 . Extended warranty is an additional cost that covers potential vehicle repairs once the manufacturer’s warranty on the vehicle expires. However, they’re not necessary for all drivers. If you’re worried about the cost of repairs to your vehicle, it might be wise to rethink the chosen vehicle. If it’s worth it, shop around instead of blindly going with the dealership’s price. How to avoid: C be sure to compare the price of this cost against the probability that it’ll actually be used prior to approving on it . Insurance for gap gaps Guaranteed Asset Protection or, is an additional cost you might encounter if you lease a car. It will cover the difference between the value of the vehicle and the loan payments if the vehicle is stolen or totaled . The best way to avoid it: If you’re on a long loan duration and you do not put money down, this cost is something you should avoid. Make sure you pay at minimum 20% of your down payment to ensure it’s unlikely for you to end up financially liable for your loan. Unavoidable dealer costs There are dealer charges which you aren’t able to avoid, but you can plan for them . Tax fee, title and license The license and title fees will cover the procedure requires to obtain the title to your vehicle as well as the license plate. The price tag attached to the tax fee will depend on your state’s sales tax rate. It is not negotiable . Takeaway: T o learn the procedures for your state, go to the state’s Department of Motor Vehicles (DMV) website. Documentation fee: The document fee covers the cost of processing all the paperwork associated with the purchase of a car and is an expense you’ll be required to pay. Some states will charge an annual fee for this item that is typically well below $100. Other states have no specific specifications, meaning that a dealer is free to charge whatever they want. Takeaway: What you pay will vary based on the state you live in and the dealer you work with. For a better understanding of what’s typical, look up local laws. Destination fee This fee covers the cost that is required by the dealer to pick up the vehicle directly from its factory. Kelley Blue Book notes that these fees can run up to $1700. According to Edmunds that, taking your vehicle to the factory will not save you the cost of delivery as you’ll be charged the full amount. Takeaway: This fee cannot be changed and could be a hefty part of the bill. The bottom line: While there are some dealership charges that are inevitable Knowing which fees are negotiated or eliminated altogether is the key to saving money in your next car-buying experience. And before you enter a showroom , conduct some research and math prior to your visit to better know .
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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. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain confidence to control their finances through providing precise, well-researched and reliable facts that break down complex subjects into bite-sized pieces.
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