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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 that provide objective and original content. This allows users to conduct research and analyze information without cost, so that you can make financial decisions 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 deals that are displayed on this site come from companies that compensate us. This compensation can affect the way and when products are listed on this site, including, for example, the order in which they may be listed within the categories of listing in the event that they are not permitted by law. Our mortgage home equity, mortgage and other home lending products. But this compensation does not influence the content we publish or the reviews you read on this site. We do not include the vast array 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 in navigating the details of borrowing money to buy an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to manage their finances by providing precise, well-studied information that breaks down complicated subjects into digestible pieces. The Bankrate promises

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You have money questions. Bankrate can help. Our experts have been helping you manage your finances for over four years. We strive to continuously provide our readers with the professional guidance and the tools necessary to be successful throughout their financial journey. Bankrate follows a strict standard of conduct, so you can rest assured that our information is trustworthy and reliable. Our award-winning editors, reporters and editors create honest and accurate information to assist you in making the best financial choices. The content created by our editorial team is objective, truthful and is not influenced from our advertising. We’re open about the ways we’re able to bring quality information, competitive rates and useful tools for our customers by revealing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products or services, or by you clicking on certain hyperlinks on our site. Therefore, this compensation may influence the manner, place and in what order items appear in listing categories, except where prohibited by law. We also offer mortgage or home equity products, as well as other home lending products. Other factors, such as our own rules for our website and whether the product is offered in your region or within your self-selected credit score range can also impact how and where products appear on this website. While we strive to provide a wide range offers, Bankrate does not include the details of each credit or financial products or services. Once you negotiate the price of your new car, you may be surprised to see a final sales figure that is hundreds, perhaps even thousands of dollars higher than the price you initially agreed to. Most of these extra fees, also called charges imposed by dealers, are imposed by law — such as tax, title and license fees. But some fees are completely 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 a requirement or cannot be negotiated. Make sure you are ready to refuse unnecessary options and haggle the fees on the products you’re interested in. Vehicle or dealer preparation fee The preparation fee for a dealer or vehicle are additional charges that the dealer charges to make the car ready for delivery. These include cleaning the car, taking any “bump protectors” off the doors, and taking off the protective covers for the seats or floor. These can be costly in extra dollars, so it’s worth being aware of. What to do: U nless the dealer did something more beyond basic preparation, refuse to pay the dealer charges. Extended warranties and accessories installed by the dealer. These additional items are purchased at the time of sale but only if they are requested by you. these items and were able to prove that you were paid a fair price for the item or service. These items might include an unintentionally stolen vehicle recovery system -such as LoJack — paint sealant, or an aftermarket sound system or wheels . Avoiding the problem: If a dealer tries to charge you for any of these items and you did not request these items, you should not pay the fee. If you did request the items, you should shop around to make sure that you’re receiving a fair price since you can obtain the items once you own the vehicle. VIN etching VIN, which is also known as the vehicle’s identification number is the combination of 17 characters that identifies your car. The procedure of VIN etching is done for security purposes. The number is etched onto the windows of the car. The cost can range from $150 to $300, so it’s best to avoid this additional cost and tackle it yourself. This is one of the easiest charges to stay clear of, therefore be sure to plan to prevent it from falling into the paper cracks . What to do: S ay no to this extra charge and save money by going directly through the body shop for this service. There is even an online DIY kit that costs between $20 and $40 . Extended warranty is an additional cost which can be used to cover any potential repairs when the manufacturer’s warranty on the vehicle expires. But they’re not required for all drivers. If you are worried about the price of possible repair costs, it could be prudent to reconsider your choice of vehicle. And if it is worth it, do some research instead of relying on the dealership’s price. Avoid: increase the amount of this charge against the probability that it will actually be used before signing off on it . Insurance for gap gaps Guaranteed Asset Protection or , is an extra fee that you may encounter if you are leasing a vehicle. It covers the difference between the price of the vehicle and the loan payments in the event that the vehicle is totaled or stolen . How to avoid: U If you’re on a long loan period and have no cash down, this charge is something you should avoid. Pay at minimum 20% of your down payment to ensure it’s unlikely that you become the owner of your loan. Unavoidable dealer fees There are dealer charges which you aren’t able to avoid, but you can plan for these . Tax fee, title and license The license and title fees cover the process that is required to obtain the title to your vehicle and the license plate. The cost of the tax rate will be contingent on the state’s sales tax rate. It is not negotiable . Takeaway: T o learn the process in your state, check your state’s Department of Motor Vehicles (DMV) website. Documentation fee The documentation fee is the cost for processing all the paperwork associated to a purchase of a new vehicle and is something you will be required to pay. Some states charge an annual fee for this fee, but it is generally under $100. Some states do not have any specific specifications, meaning that a dealer may charge whatever price they wish. Takeaway: What you’ll pay will depend on the state you live in and the dealer you’re working with. For a better understanding of what’s standard, research local laws. Destination fee This fee covers the cost it costs the dealer to get the car out of the manufacturer. Kelley Blue Book notes that the cost can be upwards of $1700. According to Edmunds, taking your vehicle to the factory won’t help you pay the delivery fee as you’ll have to pay the full amount. It is a fact that this charge cannot be negotiated and will be a hefty part of the bill. The bottom line Although certain dealership fees are unavoidable, knowing which can be negotiated or removed altogether is the key to making savings when it comes to the next time you buy a car. Before you even step foot into the showroom, do some study and calculations prior to your visit to better comprehend .

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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 with the details of borrowing money to purchase a car. Written 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 the confidence to manage their finances by providing concise, well-researched, and well-written details that cut complicated topics into digestible pieces.

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