When you’re ready to buy a new vehicle, and it’s time to get to the paperwork, you may be surprised to see some additional fees on the purchase contract. You agreed to pay a specific amount, and this is not the same amount on the paperwork. Some of these additional fees can add thousands of dollars to your bill. Some fees are part of the price and are unavoidable, while others you need to dispute and NOT pay. Avoid these car-buying fees.
Knowing which fees to expect and what fees to challenge will help save you a lot of money. Knowing the reason behind these fees will help you save money too.
Fees You Have to Pay
There are legitimate fees and taxes you need to pay to purchase your vehicle,
Destination charge: Your car has to make its way from the manufacturer to the dealership, and the dealership is going to ask you to cover the costs of getting it there. The automaker, not the dealership, set the price per brand and model and is something you can’t avoid.
An easy way to know that this is a legitimate fee is by checking the vehicle’s window sticker, or Monroney Sticker.
Doc or documentation fee: Doc fees are simply a profit center for the dealership. This covers the cost of the dealer handling the paperwork. Some states limit this amount, and some don’t, but it will generally cost you about $100-500. Be sure to question any amount much more than that.
State sales tax: Unless you live in a state where there is no sales tax, you need to pay it at the time of purchase. However, if you are buying a car in a state you don’t live in, you will pay your home state’s sales tax when you register the vehicle. Make sure you remind the dealer so that they charge you the right amount.
Title, license plate and registration fee: The dealership probably has a good relationship with your local DMV and will be able to get your title and registration, tags, and plates much more efficiently and quickly than you would be able to do on your own.
Fees You Should Never Pay
Don’t be fooled into spending more money than you need to. These are fees you should never pay.
Dealer preparation charge: Similar to the delivery charge and might be listed on that unofficial window sticker. It should be included in the retail price not added as an additional expense.
Fabric protection: A little bit of Scotchgard will go a long way towards protecting your seats and is a cheaper option than paying the dealership a lot more to spray it for you. If you are really concerned with protecting your seats, buy some seat covers.
Paint protection: Paint protection is very popular these days especially with more pricey cars, a transparent film or process like Opticoat will protect your paint. It’s less expensive to go to a local detail shop. A new car’s paint should be protected by warranty if rust occurs.
Rustproofing and undercoating: Rustproofing is old school, unless you are driving through salt piles your vehicle’s undercarriage will do just fine in almost any inclement weather without paying for this expensive charge. The risk of rust is low and the warranty covers it. Pass on this
Vehicle identification number etching: They will try and sell it to you as an additional security in case your vehicle is stolen. Collision shops can add that you your ride if you are really that concerned. Insurance covers stolen cars, so pass.
Advertising fee: Dealerships pay to advertise their business, and they will try and pass on some of that cost to you. Ideally, this cost should be told to you before you see it on the final paperwork, and often it will be listed on the vehicle’s sales tag. If the first time you hear about it is in the contract, definitely push to have it taken out.
Nitrogen fees: The dealer will offer to fill your tires with pure nitrogen gas to get more life out of your tires. We use nitrogen in our races car tires, this is a waste for daily drivers and you can always add it later. Pass and go with regular air. The dealer can charge as much as $200. Yikes!
For Used Cars – Reconditioning fee: If you’re purchasing a used car you need to be wary of this fee. When car dealers purchase used vehicles they recondition them to get them “showroom ready.” Reconditioning includes mechanical inspections, detailing, and more. It is the cost of doing business for a car dealer.
If you’re looking at purchasing a used car and the dealer has added an additional reconditioning fees to the purchase price, you should walk away. This is not a fee that you should pay. This cost incurred by the dealer and part of the selling price.
The Bottom Line
If you’re not sure about a particular fee, ask. An honest salesperson will be able to clearly and convincingly explain why a charge is necessary. Can you negotiate this “fee?”
Absolutely! Sales managers do not expect every vehicle they accessorize to sell for full price. This tactic to boost dealer profit works on a lot of people, but you don’t have to fall prey to it. If you aren’t interested in the accessories, negotiate them off of the selling price of the vehicle.
More Car Smarts tips and ways to save money are in my book, Lauren Fix’s Guide to loving your car.
Lauren Fix, The Car Coach® is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. Post your comments on Twitter: @LaurenFix or on her Facebook Page.
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