Common Dealership Fees You Should Not Pay
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 be agreeing to pay when you sign the paperwork. But what about all of the little fees which—when put all together—can add thousands of dollars to your bill?
Any car salesperson worth his or her weight will try and get as much out of you as they can–their job relies on commissions, after all.
Thankfully, knowing which fees to expect and what fees to challenge will help save you a lot of money.
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, set the price and usually is relatively standard across all vehicles they sell to the dealership.
An easy way to know that this is a legitimate fee is by checking the vehicle’s window sticker, or Monroney Sticker, which displays a car’s make, model, year, and suggested retail price.
- 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 about $100-500. Check your 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 the sales tax of your home state when you register. Make sure you remind the dealer you are in town to buy so that 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 worth your while 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 checking the website of or calling your local DMV.
Fee 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 itself. 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 be paying.
- 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 apart 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 towards 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: Just like the paint, your vehicle's undercarriage will do just fine in almost any inclement weather without paying for this expensive charge. Vehicle’s newer than 2006 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.