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 tools and financial calculators, publishing original and objective content. We also allow you to conduct your own research and compare data for free - so that you can make your financial decisions with confidence. Bankrate has agreements with issuers including, but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this website are provided by companies that compensate us. This compensation can affect the way and where products appear on this site, including for instance, the sequence in which they appear in the listing categories in the event that they are not permitted by law for our mortgage home equity, mortgage and other home loan products. However, this compensation will not influence the content we publish or the reviews appear on this website. We do not cover the universe of companies or financial deals that could be available 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 specializes in assisting readers with the details of borrowing money to buy an automobile. 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 through providing concise, well-researched and informative information that breaks down otherwise complex topics into manageable bites. The Bankrate promise
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We receive compensation for the promotion of sponsored goods or services, or when you click on specific links on our site. Therefore, this compensation may impact how, where and in what order items appear within listing categories, except where prohibited by law. We also offer mortgage or home equity products, as well as other home lending products. Other elements, such as our own proprietary website rules and whether or not a product is offered in the area you reside in or is within your personal credit score can also impact the manner in which products appear on this site. While we strive to provide the most diverse selection of products, Bankrate does not include information about each credit or financial product or service. After you have negotiated the cost of your new vehicle, you could be shocked to see a final sales number that is hundreds, or even thousands more than what you originally agreed upon. A majority of these additional costs, also known as the dealer's fees are required by law -- like title, tax and licensing fees. However, there are some fees that are entirely dependent on the particular dealer and are negotiated . The dealer's fees that you can cut out and negotiate Not every fee the dealer can throw at you is non-negotiable or mandatory. Be ready to turn down any unnecessary options and bargain the charges for the products you want. The preparation fee for the dealer or vehicle The preparation fee for a dealer or vehicle are extra charges that the dealer adds to get the vehicle ready for delivery. This includes cleaning the car, removing all "bump protectors" off the doors, and taking off the protective covers for the seats or floor. It could cost hundreds of extra dollars, so it's important to be aware of. What to do: U nless the dealer has done something above and above the normal preparation process, you should not be forced to pay these fees. Accessories and extended warranties installed by dealers. These additional items are payable when you make the sale, but only if you requested them and found that you are being charged a fair price for the item or service. These items might include a stolen vehicle recovery systemlike LoJack -- paint sealant, or an aftermarket system for sound or wheels . How to avoid If a seller tries at charging you for any of these items and you didn't request these items, you should not pay the associated fee. If you did request them, shop around to ensure that you are getting a fair price because you can get any of these items elsewhere once you own the vehicle. VIN etching The VIN, or vehicle identification number, is the combination of 17 characters that identify your vehicle. The procedure of VIN engraving is performed for security purposes. It etchs the number on the windows of your car. It can cost between $150 and $300, so it is recommended to steer clear of this extra cost and handle the issue on your own. It's one of the easiest charges you can avoid. So be sure to be prepared to ensure that it doesn't slip through the paperwork cracks . What to do: S ay no to this additional fee and reduce costs by going directly through the body retailer for this service. You can even find a DIY kit online that costs between $20 and $40 . Extended warranty is an additional fee that can cover potential car repairs once the manufacturer's warranty on the car expires. However, they're not necessary for all drivers. If you're worried about the price of possible vehicle repairs, it may be a good idea to reconsider the choice of vehicle. And if it is worth it, do some research instead of relying on the dealership's offer. What to do: ompare the cost of this fee with the likelihood that it will actually be used prior to approving on it . The gap insurance guarantee, also known as asset protection, or, is an additional cost that you could be charged if are leasing a car. It covers the difference between the price of the car and the loan payments in the event that the vehicle is stolen or totaled . What to do: even if you have a lengthy loan term and put no money down, this cost is something you should avoid. Pay at least 20% on your down payment so that it's unlikely for you to become the owner of the loan. Unavoidable dealer costs There are dealer charges that you will not be able to avoid, but you can plan for them . Tax, title and license fees The fees for title and license will cover the procedure it takes to get an auto title as well as 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 . Takeaway: T o learn the procedure for your state, go to your state's Department of Motor Vehicles (DMV) website. Documentation fee This fee is the cost for handling all paperwork that comes with the purchase of a car and is something you will have to pay. Some states will charge the fee in one lump fee, but it is generally below $100. Some states do not have any specific requirements, so 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 deal with. For a better understanding of what's standard, research local laws. Cost of destination This charge covers the cost that is required by the dealer to take the vehicle from the factory. Kelley Blue Book notes that the cost can be upwards of $1,700. According to Edmunds the process of the time you pick up your car at the factory will not save you the cost of delivery and you'll have to pay the entire amount. It is a fact that this charge cannot be negotiated and will be an expensive portion of your bill. The bottom line is that while there are some dealership charges that are unavoidable Knowing which fees can be negotiated or removed altogether is the key to making savings in the next time you buy a car. And before you enter a showroom do some research and math before you go to understand .
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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 borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to manage their finances through providing clear, well-researched details that cut otherwise complicated topics into digestible pieces.
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