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 smarter financial decisions by offering interactive tools and financial calculators as well as publishing authentic and objective content. This allows you to conduct your own research and compare information at no cost – so you can make decisions about your finances 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 deals that are displayed on this website are provided by companies who pay us. This compensation may impact how and when products are listed on the site, such as the order in which they may be listed within the categories of listing, except where prohibited by law. This applies to our mortgage, home equity and other home lending products. But this compensation does affect the content we publish or the reviews you see on this site. We do not contain the universe of companies or financial deals that could be accessible to you. SHARE: Photographee.eu/Getty Images
3 minutes read. Published July 14, 2022
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the details of borrowing money to buy a car. Written 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 manage their finances by providing clear, well-researched facts that break down complicated subjects into digestible pieces. The Bankrate guarantee
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We are compensated for the placement of sponsored products andservices or when you click on specific links on our site. So, this compensation can affect the way, location and in what order products are listed and categories, unless it is prohibited by law. This is the case for our mortgage home equity, mortgage and other home lending products. Other factors, like our own proprietary website rules and whether a product is available within your area or at your own personal credit score can also impact the way and place products are listed on this site. Although we try to offer 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 vehicle, you might be shocked by a final sale figure that is hundreds, or even thousands, higher than what you originally agreed upon. A majority of these additional fees, also called dealer fees, are imposed by law — for example, taxes, title and licensing fees. However, some fees are dependent on the dealer to negotiate . The dealer’s fees that you can cut out and negotiate Not all fees that a dealer offers you is non-negotiable or mandatory. Be prepared to reject unnecessary options and haggle the charges for the products you’re interested in. The preparation fee for the dealer or vehicle Vehicle or dealer preparation fees are charges the dealer charges to make the car ready for delivery. This includes washing the car, removing any “bump protectors” off the doors, and taking off the protective covers for the floor or the seats. It could cost hundreds of extra dollars, so it’s worth paying attention to. How to avoid: U nless the dealer has done something above and beyond the basic preparation, do not to pay these charges. Accessories and extended warranties installed by dealers. These extras are paid for during the purchase, 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. These items might include an unintentionally stolen vehicle recovery device- like LoJack — paint sealant or an aftermarket sound system or wheels . Avoiding the problem when a dealer attempts to charge you for one of these products and you did not request these items, you should not pay the cost. If you did ask the items, you should shop around to ensure that you are receiving a fair price since you can obtain all of these items once you own the vehicle. VIN etching or vehicle identification number is the collection of 17 characters that identifies your vehicle. The procedure of VIN etching is done to protect yourself. It etches the number onto the car’s windows. It could cost anywhere between $150 and $300, which is why it’s best to stay clear of this cost and handle the issue on your own. This is among the easiest fees you can avoid. So make certain to prepare to ensure that it doesn’t slip through the cracks in your paperwork . How to avoid Say no to this extra charge and save money by going directly to the body shop for this service. You can also find a DIY kit online that costs between $20 and $40 . Extended warranty is an additional fee which can be used to cover any potential repairs once the manufacturer’s warranty for the vehicle expires. However, they’re not necessary for all drivers. If you are worried about the price of possible repair costs, it could be wise to rethink the choice of vehicle. If it’s worth it, shop around instead of relying on the dealer’s offer. Avoid: be sure to compare the price of this cost against the possibility that it will be used before signing off on it . Gap insurance Guaranteed asset protection or, is an additional cost you might be charged if lease a car. It covers the difference between the price of the car and the loan payments if the vehicle is stolen or totaled . What to do: nless you have a long loan term and put no cash down, this charge should be avoided. Make sure you pay at least 20% on your down payment to ensure it’s unlikely that you be charged the owner of the loan. Unavoidable dealer costs There are dealer charges that you will not be in a position to avoid, however you can prepare yourself for them . Tax as well as title and license costs The fees for title and license cover the process that it takes to get a vehicle title and the license plate. The price tag attached to the tax rate will be contingent on the state’s sales tax rate. It is not negotiable . Takeaway: T o learn the procedures for your state, go to the state’s Department of Motor Vehicles (DMV) website. Documentation fee This fee is the cost for processing all paperwork involved to a purchase of a new vehicle and is the amount you need to pay. Some states charge a flat fee for this fee, but it is generally less than $100. Other states have no specific rules, which means that dealers can charge whatever it wants. Takeaway: What you pay for will differ based on your state 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 it takes for the dealership to get the car directly from its factory. Kelley Blue Book notes that the cost can be upwards of $1700. According to Edmunds, taking your vehicle to the factory will not save you the delivery fee as you’ll be required to pay the entire amount. Takeaway: This fee 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 can be reduced or negotiated altogether is the key to making savings in your next car purchase. Before you even step foot into a showroom do some investigation and calculate before you go to comprehend .
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ins and outs of securely borrowing money to buy cars. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain the confidence to control their finances through providing concise, well-researched, and well-written facts that break down complex topics into manageable bites.
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