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 decisions by providing you with interactive financial calculators and tools, publishing original and objective content. We also allow you to conduct research and compare information for free – so that you can make your financial decisions without trepidation. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The deals that are displayed on this site come from companies who pay us. This compensation could affect how and when products are listed on the site, such as, for example, the order in which they may appear within the listing categories and other categories, unless prohibited by law. This applies to our mortgage or home equity products, as well as other home lending products. However, this compensation will affect the information we publish, or the reviews that you see on this site. We do not cover the universe of companies or financial deals that could 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 specializes in assisting readers to navigate the ins and outs of securely borrowing money 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 passionate about helping readers gain the confidence to manage their finances with clear, well-researched information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promise
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This compensation could impact how, where and when products appear within listing categories in the event that they are not permitted by law. We also offer mortgage home equity, mortgage and other products for home loans. Other elements, such as our own website rules and whether a product is available within your area or at your self-selected credit score range may also influence the manner in which products appear on this site. While we strive to provide an array of offers, Bankrate does not include information about each credit or financial product or service. Once you negotiate the price of your car you could be shocked to see a final sales amount of hundreds perhaps even thousands more than the price you initially agreed to. A majority of these additional fees, also called charges imposed by dealers, are mandated by law — such as tax, title and licensing fees. However, some fees are up to the individual 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. Make sure you are ready to refuse any unnecessary options and bargain the charges for the products you’re looking for. The preparation fee for the dealer or vehicle Dealer or vehicle 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 disposing of the protective coverings for the seats or floor. These can be costly in extra dollars, so it’s worth paying attention to. What to do: U nless the dealer has gone above and above the normal preparation process, you should not be forced to pay the dealer fees. Extended warranties and accessories installed by the dealer. These extras are paid for at the time of sale, however, only if you have requested these items and were able to prove that you were charged a fair price for the item or service. This could be the stolen vehicle recovery system -like LoJack paint sealant, or an aftermarket sound system , or wheels . What to do If a seller tries at charging you for one of these items and you did not request them, decline to pay the associated fee. If you did ask for the items, you should shop around to ensure that you are paying a fair amount since you could purchase the items after you own the car. VIN etching which is also known as the vehicle’s identification number is the collection of 17 characters that identify your vehicle. The process of VIN engraving is for security purposes. The number is etched onto the windows of the car. It can cost between $150 and $300, so it’s best to avoid this additional cost and handle it yourself. This is among the easiest fees to stay clear of, therefore make sure to plan to prevent it from falling through the paperwork cracks . How to avoid Say no to this extra charge and cut costs by going directly through a body retailer for this service. You can even find an online DIY kit for around $20 to $40 . Extended warranty is an additional cost that can cover potential car repairs when the manufacturer’s warranty on the car expires. But they aren’t necessary for everyone. If you’re concerned about the cost of repair costs, it could be prudent to reconsider your choice of vehicle. And if it is worth the cost, consider other options instead of blindly going with the dealership’s offer. What to do: be sure to compare the price of this charge against the possibility that it will be utilized prior to signing on it . Insurance for gap gaps Guaranteed Asset Protection, or , is an extra cost you might be met with if you lease a car. It will cover the difference between the value of the car and the loan payments if 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 one you must avoid. Pay at least 20% on your down payment so that it is unlikely that you become the owner of your loan. Unavoidable dealer charges There are other dealer fees that you won’t be able to avoid, but you can plan for these . Tax, title and license fees The license and title fees are the cost for the process requires to obtain an auto title and a license plate. The cost of the tax rate will be contingent on the state’s sales tax rate. It is not negotiable . To learn more about the procedures in your state, visit the state’s Department of Motor Vehicles (DMV) website. Documentation fee: The document fee is the cost for processing all the paperwork associated with the purchase of a car and is something you will need to pay. Certain states have the fee in one lump item that is typically well under $100. Some states do not have any specific rules, which means that dealers may charge whatever price they wish. The amount you pay for will differ based on the state you live in and the dealer you work with. For a better understanding of what’s standard, research local laws. Cost of destination This charge covers the cost is required by the dealer to take the vehicle directly from its factory. Kelley Blue Book notes that these fees can run upwards of $1700. According to Edmunds, picking up your vehicle at the factory won’t save you the cost of delivery as you’ll be required to pay the full amount. Takeaway: This fee cannot be reduced and is an expensive portion of your cost. The bottom line: While there are some dealership charges that are unavoidable Knowing which fees can be reduced or negotiated altogether is the key to saving money in your next car-buying experience. Before you step into the showroom, do some research and math prior to your visit to better know .
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ins and outs of securely borrowing money to buy a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to control their finances through providing concise, well-researched, and well-written facts that break down complex subjects into bite-sized pieces.
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