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. This allows you to conduct research and compare data at no cost – so you can make your financial decisions 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 Make money The products that appear on this site are from companies that compensate us. This compensation may impact how and when products are featured on this website, for example, for example, the sequence in which they be listed within the categories of listing in the event that they are not permitted by law. Our mortgage or home equity products, as well as other home lending products. This compensation, however, does not influence the information we provide, or the reviews that you see on this site. We do not include the vast array of companies or financial offerings that might 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 specializes in helping readers to navigate the ins and outs of securely borrowing money to purchase an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to manage their finances by providing clear, well-researched information that breaks down complex topics into manageable bites. The Bankrate promises
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So, this compensation can influence the manner, place and when products are listed and categories, unless it is prohibited by law. We also offer mortgage home equity, mortgage and other home loan products. Other factors, like our own website rules and whether the product is available in your region or within your own personal credit score can also impact the manner in which products appear on this website. While we strive to provide an array of offers, Bankrate does not include information about every financial or credit products or services. After you have negotiated the cost of your new vehicle, you might be shocked to see a final sales amount which is hundreds or maybe even thousands more than what you originally agreed upon. A majority of these additional fees, also called the dealer’s fees are required by law, such as tax, title and licensing fees. But some fees are completely up to the individual dealer and are negotiated . Fees for dealers you can eliminate and negotiate Not all fees a dealer throws your way is non-negotiable or mandatory. Be ready to turn down any unnecessary options and bargain the costs of the items you’re looking for. The preparation fee for the dealer or vehicle Dealer or vehicle preparation fees are additional charges that the dealer adds to get the vehicle ready to be delivered. This includes washing the car, removing the “bump protectors” off the doors, and disposing of the protective coverings for the seats or floor. It could cost hundreds of extra dollars, so it’s worth being aware of. How to avoid: U nless the dealer has done something above and beyond basic preparation, refuse to pay these charges. Dealer-installed accessories and extended warranties These extras are purchased during the sale but only if you requested these items and were able to prove that you are being given a fair cost for the item or service. This could be a stolen vehicle recovery systemlike LoJack — paint sealant, or an aftermarket sound system , or wheels . How to avoid: If a dealer 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 for them, shop around to make sure that you’re paying a fair amount since you can obtain all of these items when you own the vehicle. VIN etching VIN, which is also known as the vehicle’s identification number is the grouping of 17 characters which identify the car. The process of VIN engraving is performed to ensure security. It etchs the number on the windows of your car. The cost can range from $150 and $300, which is why it is recommended to steer clear of this extra expense and manage it yourself. This is one of the most straightforward fees to avoid, so be certain to prepare to keep it from slipping into the paper cracks . What to do the cost: Say no to this additional fee and reduce costs by going directly through a body retailer for this service. You can also find a DIY kit online for around $20 to $40 . Extended warranty: This is an additional fee that covers potential vehicle repairs when the manufacturer’s warranty for the vehicle expires. But they’re not required for all drivers. If you’re worried about the cost of vehicle repairs, it may be prudent to reconsider your chosen vehicle. If it’s worth the cost, consider other options instead of blindly going with the dealer’s offer. Avoid: increase the amount of this fee with the probability that it will actually be utilized prior to signing on it . Insurance for gap gaps Guaranteed Asset Protection or, is an additional cost that you could encounter if you are leasing a car. It will cover the difference between the price of the vehicle and the loan payments in the event that the vehicle is destroyed or stolen . The best way to avoid it: nless you have a long loan term and put no money down, this cost should be avoided. Make sure you pay at least 20% on your down payment so that it is unlikely that you be charged on the loan. Unavoidable dealer charges There are also dealer fees that you will not be in a position to avoid, however you can prepare for these . Tax as well as title and license costs The title and license fees will cover the procedure requires to obtain the title to your vehicle and a license plate. The cost of the tax amount will be based on your state’s sales tax rate and cannot be negotiated . To learn more about the procedures in your state, visit your state’s Department of Motor Vehicles (DMV) website. Documentation fee This fee covers the cost of processing all paperwork involved with a new car purchase and is an expense you’ll need to pay. Certain states have an annual fee for this cost, which is usually less than $100. Some states do not have any specific requirements, so a dealer can charge whatever it wants. The amount you’ll pay will depend on the state you live in and the dealer you deal with. To get an idea of what’s standard, research local laws. The fee for destination is the amount it costs the dealer to take the vehicle out of the manufacturer. Kelley Blue Book notes that the cost can be up to $1,700. According to Edmunds, taking your vehicle to the factory won’t help you pay the delivery fee and you’ll be charged the full amount. It is a fact that this charge cannot be changed and could be an expensive portion of your total cost. The bottom line is that while some additional dealership fees are unavoidable, knowing which are negotiated or eliminated entirely is crucial to making savings on your next car purchase. And before you enter the showroom, do some research and math ahead of time to better know .
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the ways and pitfalls of taking out loans to buy a car. Written 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 confidence to control their finances with precise, well-researched and reliable information that breaks down complicated topics into digestible pieces.
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