The price of the car is only the beginning of negotiations
7 Dealership Fees to Avoid
by Gary Foreman
You've just finished negotiating on a new car. It was some of the toughest dealing you'll ever do. Then the salesperson escorts you to the business office for some "paperwork."
And the negotiating begins all over again. The business manager isn't just there to help you fill out the forms. The business manager is a trained salesperson with the job of getting you to pay for various dealership fees and services. So, when you head to the business office, be prepared to negotiate these seven fees and service offers.
Processing Fee - Every dealer has it. They may call it a documentation fee. It's to cover their cost of paperwork. Expect them to add between $100 and $400.
Like all fees they'll tell you it's non-negotiable. And, it is, if you don't negotiate it. How willing they are to lower it depends on how good a deal you got on the car. If you cut their profit to the bone, they'll fight for every dollar. If they give in easily, you might have overpaid on the car.
Dealer Prep- Does the dealer need to prepare the car for you? Sure. Do you need to pay for it? That depends.
New cars are ready to drive when they're delivered from the factory. They really only need to have the fluids and tires checked. After that, a quick car wash is all that's needed before you're handed the keys. So the dealer is trying to charge you hundreds for a few minutes work.
Delivery Charge - Since Henry and the Model T, manufacturers have been charging to ship cars from the assembly plant to the city where they were sold. Buyers accepted the destination charge as a reasonable expense that they would pay. In fact, it's listed on the window sticker and included in the invoice price of a car.
Some dealers have started tacking on a delivery charge above and beyond the destination charge, which is the same as charging you twice for shipping the car from the factory. Unless you plan on returning the car, don't let the dealer double dip.
Advertising Fee - Auto manufacturers add a charge to each car they deliver to the dealer to help them pay for advertising. That charge is included in the invoice price to the dealer.
Once again, some dealers will try to get you to pay twice, as part of the invoice first and then again as a separate fee when the deal is finalized. Tell them that you're not a sucker and to remove the charge.
VIN Etching - Police and insurance companies encourage you to have your VIN number etched into your car's windows as an anti-theft measure. Auto theft rings don't want to have to replace all the glass before they sell your car, so they move on to one without VIN etching.
As an anti-theft measure, VIN etching is good and inexpensive. It's something that you should do for your car, but doing it at the dealer means you'll pay top dollar (often $200 or more).
Check alternatives. Often the police department or local service clubs will do etching for free or a nominal amount. DIY kits are available for around $25.
Compare auto loans before you car shop.
Fabric Protection - Most dealers will offer you a fabric protection plan for typically around $250. They'll treat your interior to make it stain resistant. Modern fabrics don't need the treatment, but if your family is particularly messy, buy a can of Scotchgard™ for about $10 and spray it yourself.
Paint Protection - Dealers know you like that new car look, and that you'll want to keep it. Therefore, they're perfectly willing to charge you $250 or so for paint protection.
Car finishes have greatly improved over the last 50 years. They don't need extra protection. What you'll really be getting from the dealer is a glorified wax job. Do it yourself or hire a neighborhood teen. You'll save a couple hundred for the effort.
Reviewed June 2017
Take the Next Step
- Make sure you know these top 3 things auto salesmen discuss in the manager's office before you head to the dealership.
- Discover more smart ways to save at an auto dealership by visiting the Dollar Stretcher Library.
- Use this handy cheat sheet from a 30-year veteran of the auto insurance industry to get the best auto insurance deal that you can.
- Get all the facts before you buy or sell a vehicle. Edmunds.com will give you what you need to know to make a confident deal.
- Get control of your financial life. Subscribe to Financial Independence, a free daily email that provides you with the tools to help you gain that control and achieve financial independence. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist for FREE!
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.
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