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 your own research and analyze information without cost, so that you can make decisions about your finances with confidence. Bankrate has partnerships with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this website are provided by companies that compensate us. This compensation may impact how and when products are featured on this site, including for instance, the order in which they appear within the listing categories, except where prohibited by law. Our mortgage home equity, mortgage and other home lending products. But this compensation does affect the information we publish, or the reviews you read on this site. We do not cover the vast array of companies or financial offers that may be available 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 helping readers in navigating the ins and outs of securely taking out loans to purchase a car. 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 confidence to take control of their finances by providing precise, well-studied information that breaks down complex topics into manageable bites. The Bankrate guarantee
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This compensation could affect the way, location and in what order items appear within listing categories, except where prohibited by law. This is the case for our mortgage home equity, mortgage and other products for home loans. Other factors, like our own website rules and whether the product is offered in the area you reside in or is within your own personal credit score could also affect the way and place products are listed on this site. We strive to provide the most diverse selection of products, Bankrate does not include details about each credit or financial item or product. When you’ve negotiated the price of your new car, you could be shocked to find a final sales number that is hundreds, perhaps even thousands, higher than what you originally agreed upon. The bulk of these additional fees, also called charges imposed by dealers, are imposed by law such as tax, title and license fees. However, there are some fees that are entirely dependent on the particular dealer to negotiate . Dealer fees you can avoid and negotiate Not every fee that a dealer offers you is non-negotiable or mandatory. Make sure you are ready to refuse unnecessary options and haggle the charges for the products you’re looking for. Vehicle or dealer preparation fee The preparation fee for a dealer or vehicle are extra charges that the dealer adds to get the vehicle ready to be delivered. They include cleaning the car, taking all “bump protectors” off the doors, or taking off the protective covers for the floor or the seats. These can be costly in extra dollars, so it’s important to be aware of. Tips to avoid it: U nless the dealer did something more beyond the basic preparation, do not to pay the dealer fees. Dealer-installed accessories and extended warranties These additional items are payable when you make the purchase, however, only if you have requested them and determined that you are being charged a fair price for the product or service. These items might include an unintentionally stolen vehicle recovery devicesuch as LoJack paint sealant or an aftermarket sound system , or wheels . Avoiding the problem when a dealer attempts to charge you for one of these items and you did not request them, decline to pay the fee. If you did ask them, shop around to make sure you’re paying a fair amount since you can obtain all of these items when you own the vehicle. VIN etching The VIN, or vehicle identification number is the collection of 17 characters which identify your vehicle. The procedure of VIN engraving is for security purposes. It etchs the number on the windows of your car. It could cost anywhere between $150 and $300, which is why it’s wise to avoid this additional cost and handle the issue on your own. This is among the easiest fees to avoid, so be sure to plan to prevent it from falling into the paper cracks . How to avoid: S ay no to this extra charge and reduce costs by going directly through an auto shop for this service. You can also find a DIY kit online at a cost of between $20 and $40 . Extended warranty An is an additional cost that can cover potential car repairs once the manufacturer’s warranty on the car expires. However, they’re not necessary for every driver. If you’re worried about the cost of repair costs, it could be wise to rethink the you’ve chosen to purchase. If it’s worth it, shop around instead of going blindly with the dealership’s price. What to do: ompare the cost of this cost against the probability that it will be used prior to approving on it . Insurance for gap gaps Guaranteed Asset Protection, or , is an additional cost you might be met with if you are leasing a car. It will cover the difference in value of the car and loan payments if the vehicle is stolen or totaled . What to do: even if you have a lengthy loan duration and you do not put money down, this cost is one you must avoid. At minimum 20% of your down payment to ensure that it is unlikely that you be charged on the loan. Unavoidable dealer charges There are other dealer fees that you won’t be in a position to avoid, however you can prepare for them . Tax, title and license fees The license and title fees cover the process that is required to obtain the title to your vehicle and the license plate. The price tag attached to the tax rate will be contingent on your state’s sales tax rate and cannot be negotiated . To learn more about the procedure in your state, check your state’s Department of Motor Vehicles (DMV) website. Documentation fee: The document fee covers the cost of handling all paperwork that comes with a new car purchase and is something you will need to pay. Some states will charge an annual fee for this fee, but it is generally less than $100. Other states have no specific specifications, meaning that a dealer can charge whatever it wants. The amount you pay for will differ based on the state in which you reside and the dealer you’re working with. For a better understanding of what’s typical, look up local laws. Destination fee This fee covers the cost that it takes for the dealership to get the car out of the manufacturer. Kelley Blue Book notes that these fees can run as high as $1,700. According to Edmunds, taking your vehicle to the factory won’t save you the destination charge and you’ll be charged the full amount. It is a fact that this charge cannot be reduced and is a hefty part of the total cost. The bottom line Although some additional dealership fees are unavoidable, knowing which can be negotiated or removed entirely is crucial to saving money on your next car purchase. Before you step into a showroom , conduct some investigation and calculate ahead of time to better know .
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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 in navigating the ins and outs of securely borrowing money to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are enthusiastic about helping readers gain confidence to manage their finances through providing clear, well-researched facts that break down otherwise complex topics into manageable bites.
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