When you’re ready to buy a new vehicle, you’ll most likely spend a lot of time picking the perfect make and model, setting a budget, getting approved for a car loan, and choosing a dealership. You have a rough idea of how much you will agree to pay when you sign the paperwork. But what about all of the little fees that—when put all together—can add thousands of dollars to your bill?
Any car salesperson will try to get as much for the car as possible; their job relies on commissions, after all.
The following are fees that you will have to be prepared to pay when buying from a car dealership.
- 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, sets the price and it usually is relatively standard across all vehicles it sells to the dealership.
An easy way to know that something is a legitimate fee is by checking the vehicle’s window sticker, or Monroney Sticker, which displays a car’s make, model, year, suggested retail price, and other details.
- Conveyance or documentation fee: 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 anywhere from $75 to over $500. Check local laws before you head to the dealership, and 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. 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 you are in town to buy so they charge you the right amount.
- Title and registration fee: Not only is it hard to get out of this one, but it's not worthwhile to do so. 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.
If you already have plates, make sure the registration fee takes that into account. You can check what the fees should be by visiting the website or calling your local DMV.
Fees You Might Have To Pay
Watch out for the following fee. You will have to do your due diligence to determine whether or not this fee is necessary.
- 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.
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 sticker, the preparation fee comes from putting the package together. Listing the prices, finalizing the sale, and more. It should be part of the retail price not added as an additional expense. Skip this one, too.
- Fabric protection: A little bit of Scotchgard will go a long way toward protecting your seats and is a cheaper option than paying the dealership a lot more to spray it for you. Things like parking in the shade and using a windshield sun protector will go a long way, too. If you are really concerned with protecting your seats, your best protection is to spend your money on seat covers.
- Paint protection: Do you think that the world's largest auto manufacturers are selling cars with wimpy paint? Paint protection is a transparent film made out of urethane material. A new car’s paint should be protected by warranty if rust occurs. Just ask for wax the next time you go to the car wash.
- Rustproofing and undercoating: Like the paint, your vehicle's undercarriage will do just fine in almost any inclement weather without paying for this expensive charge. Newer vehicles are mostly made with galvanized metal, which greatly reduces the risk of rust.
- Vehicle identification number etching: They will try and sell it to you as an additional precaution to protect against your car being stolen and resold. They're right, but what they won't tell you is that you can get it done for much less by going to an auto shop (or doing it yourself at home).
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. A car represents a significant expense as it is, and you don't want to pay for anything you don't need.
Frequently Asked Questions (FAQs)
How much are car dealer fees?
Fees vary based on specific dealer and state requirements, and it depends on which ones you accept. They usually range from a few hundred to thousands of dollars on top of the car's sale price.
How do you avoid car dealer fees?
The best way to avoid dealer fees is to know about the potential fees you'll see before you even set foot in a dealer. Knowing which fees are negotiable will help you to avoid unnecessary ones and keep your total cost as low as possible.