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 smarter financial decisions by offering interactive tools and financial calculators, publishing original and objective content. This allows you to conduct research and analyze information at no cost – so you can make financial decisions 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 compensate us. This compensation could affect how and where products appear on this site, including the order in which they be listed within the categories of listing and other categories, unless prohibited by law. Our mortgage or home equity products, as well as other products for home loans. This compensation, however, does not influence the information we publish, or the reviews appear on this website. We do not contain the entire universe of businesses or financial deals that could be accessible to you. SHARE: Photographee.eu/Getty Images
3 min read Published July 14, 2022
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of borrowing money to buy cars. 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 confidence to take control of their finances through providing precise, well-studied facts that break down complicated subjects into digestible pieces. The Bankrate promise
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This compensation could influence the manner, place and in what order products are listed in the event that they are not permitted by law. We also offer mortgage, home equity and other home lending products. Other elements, such as our own rules for our website and whether a product is available within your area or at your own personal credit score could also affect the manner in which products appear on this website. We strive to provide an array of offers, Bankrate does not include information about each credit or financial products or services. When you’ve negotiated the price of your new vehicle, you may be surprised to see a final sales amount which is hundreds or or even thousands, higher than you originally negotiated. A majority of these additional fees, also called dealer fees, are required by law, such as tax, title and licensing fees. But some fees are completely up to the individual dealer to negotiate . The dealer’s fees that you can cut out and negotiate Not every fee a dealer throws your way is mandatory or non-negotiable. Be ready to turn down unnecessary options and haggle the charges for the products you’re looking for. Dealer or vehicle preparation fees The preparation fee for a dealer or vehicle are extra charges that the dealer adds to get the car prepared for delivery. This includes cleaning the car, taking any “bump protectors” off the doors, and getting rid of the protective covers for the floor or seats. It could cost hundreds of additional dollars, and is worth being aware of. How to avoid: U nless the dealer has done something above and beyond the basic preparation, do not to pay the dealer charges. Extended warranties and accessories installed by the dealer. These extra items are purchased at the time of sale but only if you requested these items and were able to prove that you are being given a fair cost for the product or service. They could include an unintentionally stolen vehicle recovery system — like LoJack — paint sealant or an aftermarket sound system , or wheels . What to do: If a dealer tries at charging you for one of these items , and you didn’t request them, decline to pay the associated fee. If you did request these items, do some research to make sure that you’re getting a fair price because you can obtain any of these items elsewhere when you own the vehicle. VIN etching which is also known as the vehicle’s identification number, is the collection of 17 characters that identifies your vehicle. The process of VIN etching is done to protect yourself. It etchs the number on the car’s windows. It could cost anywhere between $150 to $300, so it’s best to avoid this additional expense and manage it on your own. This is one of the easiest fees to stay clear of, therefore be sure to be prepared to prevent it from falling into the paper cracks . Tips to avoid it Say no to this additional fee and cut costs by going directly through a body shop to purchase this service. There is even an online DIY kit 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 on the vehicle expires. However, they’re not necessary for everyone. If you are worried about the cost of repair costs, it could be wise to rethink the choice of vehicle. If it’s worth it, shop around instead of going blindly with the dealership’s offer. 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 . Gap insurance Guaranteed asset protection or , is an additional cost you might be met with if you are leasing a vehicle. It covers the difference between the price of the car and the loan payments in the event that the vehicle is totaled or stolen . The best way to avoid it: even if you have a lengthy loan term and put no cash down, this charge should be avoided. Pay at minimum 20% of your down payment to ensure it’s unlikely that you end up the owner of the loan. Unavoidable dealer costs There are also dealer fees that you will not be in a position to avoid, however you can plan for these . Tax as well as title and license costs The title and license fees will cover the procedure it takes to get an auto title and the license plate. The cost of the tax fee will depend on your state’s sales tax rate. It is not negotiable . Takeaway: T o learn the procedure in your state, visit your state’s Department of Motor Vehicles (DMV) website. Documentation fee The documentation fee covers the cost of processing all the paperwork associated with a new car purchase and is an expense you’ll have to pay. Certain states have an annual fee for this cost, which is usually under $100. Other states have no specific specifications, meaning that a dealer may charge whatever price they wish. Remember that the amount you pay for will differ based on the state in which you reside and the dealer you’re working with. To get an idea of what’s standard, research local laws. Destination fee This fee 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 up to $1700. According to Edmunds, taking your vehicle to the factory won’t save you the delivery fee — you’ll likely still be required to pay the entire amount. It is a fact that this charge cannot be negotiated and will be an expensive portion of your cost. The bottom line is that while certain dealership fees are unavoidable Knowing which fees can be reduced or negotiated altogether is the key to making savings on your next car-buying experience. Before you step into a showroom do some investigation and calculate before you go to comprehend .
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This article is 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 purchase cars. The article was 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 control their finances by providing precise, well-researched and reliable information that breaks down complicated topics into digestible pieces.
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