Dealer fees: What to know and how to avoid them Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by offering interactive financial calculators and tools that provide objective and original content. We also allow users to conduct research and compare data for free – so that you can make decisions about your finances 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 Make Money The offers that appear on this site come from companies that compensate us. This compensation can affect the way and where products appear on this site, including, for example, the sequence in which they appear within the listing categories, except where prohibited by law. Our mortgage home equity, mortgage and other home lending products. However, this compensation will not influence the information we publish, or the reviews you see on this site. We do not cover 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
Writer: 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 ways and pitfalls of taking out loans to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances through providing precise, well-studied information that breaks down otherwise complex topics into manageable bites. The Bankrate promise
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We are compensated in exchange for the promotion of sponsored goods and, services, or by you clicking on specific links on our site. So, this compensation can affect the way, location and in what order items are listed in the event that they are not permitted by law for our mortgage home equity, mortgage and other home loan products. Other factors, such as our own rules for our website and whether a product is available within 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 an array of offers, Bankrate does not include the details of every financial or credit products or services. When you’ve negotiated the price of your new car, you could be shocked to see a final sales number that is hundreds, maybe even thousands of dollars higher than the price you initially agreed to. Most of these extra fees, also called the dealer’s fees are required by law, for example, taxes, title and license fees. But some fees are completely up to the individual dealer and can be negotiated . Dealer fees you can avoid and negotiate Not every fee a dealer throws your way is non-negotiable or mandatory. Make sure you are ready to refuse unneeded options and negotiate charges for the products you want. Vehicle or dealer preparation fee Dealer or vehicle preparation fees are additional charges that dealers add to make the vehicle ready for delivery. These include washing the car, removing any “bump protectors” off the doors, or taking off the protective covers for the floor or the seats. It could cost hundreds of dollars more, so it’s worth being aware of. Tips to avoid it: U nless the dealer has done something above and above the normal preparation process, you should not be forced to pay these dealer charges. Accessories and extended warranties installed by dealers. These additional items are purchased when you make the purchase, but only if they are requested by you. these items and were able to prove that you’re being charged a fair price for the item or service. This could be the stolen vehicle recovery system -like LoJack paint sealant, or an aftermarket system for sound or wheels . How to avoid when a dealer attempts to charge you for one of these products 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 get the items after you own the car. VIN etching VIN, also known as a vehicle’s identification code is the combination of 17 characters which identify your car. The process of VIN engraving is performed to ensure security. The number is etched onto the windows of the car. It could cost anywhere between $150 and $300, which is why it’s best to avoid this additional expense and manage it yourself. This is one of the easiest fees to avoid, so be sure to be prepared to keep it from slipping through the cracks in your paperwork . How to avoid Say no to this additional fee and save money by going directly through an auto retailer for this service. You can also find an online DIY kit that costs between $20 and $40 . Extended warranty is a cost-per-hour that can cover potential car repairs after the manufacturer’s warranty on the car expires. However, they’re not necessary for everyone. If you are worried about the cost of vehicle repairs, it may be prudent to reconsider your choice of vehicle. If it’s worth the cost, consider other options instead of going blindly with the dealer’s offer. Avoid: ompare the cost of this fee with the probability that it’ll actually be utilized prior to signing on it . The gap insurance guarantee, also known as asset protection, or , is an additional fee that you may be met with if you are leasing a car. It covers the difference between the price of the vehicle and the loan payment if the car is stolen or totaled . How to avoid: U If you’re on a long loan period and have no money down, this cost is one you must avoid. Make sure you pay at least 20% on your down payment to ensure that it is unlikely that you end up on your loan. Unavoidable dealer costs There are other dealer fees which you aren’t at a disadvantage, but you can prepare for them . Tax fee, title and license The title and license fees are the cost for the process it takes to get a vehicle title as well as the license plate. The cost of the tax amount will be based on the state’s sales tax rate and cannot be negotiated . Takeaway: T o learn the procedures in your state, check your state’s Department of Motor Vehicles (DMV) website. Documentation fee This fee is the cost for processing all paperwork involved to a purchase of a new vehicle and is something you will need to pay. Some states will charge an annual fee for this fee, but it is generally under $100. Other states have no specific specifications, meaning that a dealer can charge whatever it wants. Takeaway: What you pay for will differ based on the state in which you reside and the dealer you deal with. To understand what’s typical, look up local laws. Destination fee This fee covers the cost is required by the dealer to pick up the vehicle from the factory. Kelley Blue Book notes that the cost can be as high as $1700. According to Edmunds, taking your vehicle to the factory will not save you the destination charge 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 necessary but knowing which ones can be reduced or negotiated completely is essential to making savings when it comes to your next car purchase. Before you even step foot 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 is a specialist in helping readers in navigating the ways and pitfalls of borrowing money to buy an automobile. Edited 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 take control of their finances through providing concise, well-researched, and well-written information that breaks down otherwise complex subjects into bite-sized pieces.
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