Avoid Paying These Car Dealership Fees
If the thought of negotiating royalties for a new car at the dealership gives you hives, remember that research is your best friend. Before you shop, find out what commissions you will have to pay, which can be negotiated, and which can be avoided altogether.
Unavoidable dealer commissions
Don’t expect the dealership to budge by charging you sales tax and registration (or license) fees . The registration fee covers the process of registering your vehicle in your state, ordering a license plate and placing the vehicle name in your name. Sales taxes vary by state and municipality, while registration and license fees typically range from 1 to 3 percent of the vehicle’s total value.
A paperwork fee is charged for processing your registration services. Some states have a limit on the amount that can be charged, while others have little regulation. Also, some dealerships charge a flat standard rate, which means you won’t be able to negotiate a price. Depending on your car model and the state you live in, expect the average document fee to cost you between $ 100 and $ 500 . If you are being asked to pay significantly more, try negotiating a lower car price to offset the costs.
Another unavoidable charge is the destination charge, or the amount the automaker charges to get the car from the factory to the dealership, including a full tank of gas. Since the fee covers the dealership overhead, it is practically non-negotiable. The amount usually does not count towards the sale price of the vehicle, so be sure to ask. Destination fees are typically between $ 900 and $ 1200 for TrueCar .
Negotiation fee – or avoidance
If the dealer insists on any of the following commissions, it might be a good idea to leave or shop further. However, the expected total cost of the vehicle, including fees, should be your focus during these negotiations. For maximum flexibility at the negotiating table, remember that you can always make up for the difference in payment by asking for a lower car price. However, some of these charges are just old money-making attempts that should be challenged.
Advertising fee
Some dealers will try to add a few hundred dollars to your account to offset national or regional advertising campaign costs. However, this cost should already be included in the sticker price and shouldn’t come as a surprise to your final bill.
Dealer Training Fee
Sometimes the dealer will collect several hundred dollars for a “service” to prepare your car for the parking lot after you buy it. The service, also known as a “delivery charge,” can involve setting up or washing your car, but what you pay is grossly overpriced and overpriced, especially if you are buying a brand new car. If you do not deliver the car to your home, the destination fee should already cover the costs of getting the car parked for you.
Loan repayment fee
If you are financing a car purchase through a dealership, beware of the fees associated with servicing a loan. Sometimes you may be charged a transaction or service fee simply for paying on time. Take your time with funding and read the fine print carefully to understand the loan repayment terms.
Market Adjustment Fee
If you buy a popular car model that is in short supply, the dealership may charge a market adjustment fee that can cost you thousands of dollars . If the car is in demand, you will unfortunately not be able to get rid of this fee. However, you can ask for a discount if it is a temporary price that exceeds your budget.
Unnecessary additions
Fees aside, stay away from these dealer add-ons, which are either low cost, overkill with other services, or cost less if you take care of them elsewhere.
VIN etching
To prevent theft, dealerships will offer to engrave your vehicle identification number (VIN) on your car window as a theft deterrent, usually for a couple hundred dollars. While pickling could potentially give you a discount on car insurance , it’s a bad deal at that price, especially since some police forces will do it for free.
Disability and life insurance
You can almost certainly get cheaper coverage (if you are not already insured) through home, car, or life insurance than through a car dealership.
Paint sealing, anti-corrosion protection or fabric protection
Rememberthe TruCoat scene in Fargo? The vehicles are designed for a long service life and do not require additional treatments such as paint sealants or fabric sprays. These add-ons usually cost hundreds of dollars as well.
Extended warranties and service plans
Dealership warranties are generally expensive, and once you start writing in the small print, you realize that they offer limited or redundant benefits. Consumer Reports suggests instead to keep a resupply for emergencies – although if peace of mind fits your budget, there’s nothing stopping you from purchasing an extended warranty either. At least let’s look at the pros and cons first .