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 offering interactive financial calculators and tools as well as publishing authentic and objective content, by enabling you to conduct research and analyze information without cost, so that you can make decisions about your finances with confidence. 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 come from companies that pay us. This compensation can affect the way and when products are featured on the site, such as, for example, the order in which they appear in the listing categories in the event that they are not permitted by law. This applies to our mortgage home equity, mortgage and other home loan products. But this compensation does have no impact on the content we publish or the reviews you read on this site. We do not include the entire universe of businesses or financial offerings that might be accessible 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 in navigating the ins and outs of securely taking out loans to purchase cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain confidence to take control of their finances by providing concise, well-researched and informative information that breaks down complicated topics into bite-sized pieces. The Bankrate guarantee
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This compensation could influence the manner, place and in what order products appear within listing categories and categories, unless it is prohibited by law for our mortgage, home equity and other products for home loans. Other factors, such as our own website rules and whether a product is available within your region or within your personal credit score may also influence how and where products appear on this site. We strive to provide an array of offers, Bankrate does not include information about every financial or credit products or services. Once you negotiate the price of your car you may be surprised to find a final sales amount that is hundreds, perhaps even thousands, higher than what you originally agreed upon. Most of these extra charges, or the dealer’s fees are required by law — for example, taxes, title and licensing fees. However, there are some fees that are entirely dependent on the dealer and can be negotiated . The dealer’s fees that you can cut out and negotiate Not every fee the dealer can throw at you is mandatory or non-negotiable. Be ready to turn down unneeded options and negotiate costs of the items you’re interested in. Dealer or vehicle preparation fees Vehicle or dealer preparation fees are extra charges that the dealer adds to get the car prepared for delivery. They include cleaning the car, removing all “bump protectors” off the doors, or taking off the protective covers for the seats or floor. This can cost hundreds of dollars more, so it’s worth being aware of. How to avoid: U nless the dealer did something more beyond basic preparation, refuse to pay these dealer charges. Dealer-installed accessories and extended warranties These extra items are payable at the time of purchase, however, only if you have requested them and found that you’re being given a fair cost for the product or service. They could include the stolen vehicle recovery system- like LoJack — paint sealant or an aftermarket system for sound or wheels . Avoiding the problem If a seller tries in requesting payment for one of these items and you did not request these items, you should not pay the cost. If you did request the items, you should shop around to make sure you’re receiving a fair price since you can obtain all of these items when you own the vehicle. VIN etching which is also known as the vehicle’s identification number is the collection of 17 characters which identify the car. The process of VIN engraving is performed to protect yourself. It etches the number onto the car’s windows. It could cost anywhere between $150 to $300, so it’s best to stay clear of this cost and handle it yourself. It’s one of the easiest fees to stay clear of, therefore be certain to prepare to ensure that it doesn’t slip through the cracks in your paperwork . What to do: S ay no to this extra charge and cut costs by going directly through an auto shop to purchase this service. There is even a DIY kit online at a cost of between $20 and $40 . Extended warranty: This is an additional cost that covers potential vehicle repairs after the manufacturer’s warranty for the vehicle expires. However, they’re not necessary for everyone. If you’re worried about the cost of repairs to your vehicle, it might be wise to rethink the chosen vehicle. And if it is worth it, shop around instead of going blindly with the dealership’s offer. Avoid: increase the amount of this fee with the possibility that it will actually be used before signing off on it . Gap insurance Guaranteed asset protection or , is an additional fee that you may encounter if you are leasing a vehicle. It will cover the difference between the price of the car and 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 cost should be avoided. At least 20% on your down payment to ensure that it’s unlikely for you to be charged the owner of your loan. Unavoidable dealer charges There are other dealer fees which you aren’t at a disadvantage, but you can prepare for these . Tax fee, title and license The title and license fees cover the process that is required to obtain the title to your vehicle and a 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 procedures for your state, go to your state’s Department of Motor Vehicles (DMV) website. Documentation fee: The document fee covers the cost of handling all paperwork that comes to a purchase of a new vehicle and is an expense you’ll be required to pay. Some states will charge the fee in one lump fee, but it is generally below $100. Other states have no particular specifications, meaning that a dealer may charge whatever price they wish. The amount you’ll pay will depend on your state and the dealer you deal with. To understand what’s standard, research local laws. Cost of destination This charge covers the cost that is required by the dealer to take the vehicle directly from its factory. Kelley Blue Book notes that these fees can run as high as $1700. 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. The bottom line is that this fee can’t be negotiated and will be a hefty part of the bill. The bottom line Although there are some dealership charges that are unavoidable but knowing which ones can be negotiated or removed completely is essential to saving money in your next car-buying experience. And before you enter a showroom , conduct some investigation and calculate prior to your visit to better understand .
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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with 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 late 2021. They are committed to helping readers gain the confidence to control their finances through providing concise, well-researched, and well-written information that breaks down otherwise complex topics into manageable bites.
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