If you are in the market for a new vehicle, you probably have a pretty good idea of what you want to spend (or at least, you should). But in addition to the cost of the vehicle itself, there are a lot of additional new-car fees you can expect to pay when you’re purchasing a vehicle from a dealership.
These fees basically fall into three categories:
- Unavoidable fees that you will have to pay, no matter what (the biggest and the least fun)
- Fees you need to pay in a lot of cases but that you should try to negotiate
- Fees that unscrupulous car dealerships will tack onto your bill that you should insist be removed
While this list may look overwhelming, it is worth keeping in mind that a good car dealership will work with you to help you understand the process and won’t try to tack on unnecessary fees. It is worth looking at reviews online and bringing someone with you who has purchased a vehicle before, if you are feeling nervous.
Fees You Should Pay and Get Over
Adding in fees to your car loan is what leads to being upside-down on your loan. Plan to pay these fees upfront to avoid it.
- Destination fee: Unfortunately, cars can’t drive themselves (yet) from the assembly line to the dealership. Even if they could, it costs a lot of fuel and man-hours to put them on the truck or cargo ship that gets them to you, and you should expect to pay for this.
- Sales tax: Unless you are buying a car in a state that does not charge sales tax, there’s no legal way to wiggle your way out of this one. You will likely have to pay state as well as local sales tax on your new or used vehicle. Sometimes, you’ll get a sales-tax break if you trade in an old vehicle.
Fees Worth Trying To Negotiate
Not all fees are set in stone. These you can try to negotiate.
- Car preparation fee: If you are buying a used car, it makes sense that you will pay a few hundred dollars for a routine inspection and some cleaning. But if you are buying a new car, it really should not need any prep before you’re on your way. If you see this listed for a new car, ask if there was a mistake.
- Document fee/conveyance Charge: You are going to watch them do the work, it’s not going to take all that long, and it is going to cost you several hundred dollars. You will see it listed as a line item and your salesperson will tell you that it’s non-negotiable. While that might be technically true at certain dealerships, it’s worth asking whether or not it can be lowered. Some states have maximum doc fees that dealerships can charge. Many states are largely unregulated, so ask about this charge before you start looking at vehicles, and negotiate the overall price based on what they tell you. Anything higher than $300 is a red flag.
- Extended warranty coverage: You do not necessarily need an extended warranty; it’s best talking it over with your insurance agent before you ever head out to look at new vehicles. In many cases, it might be overkill, but it is sometimes worth it.
Fees You Should Not Pay at All
Some fees are over the top and can be avoided altogether, or you can find a better price elsewhere.
- Advertising fee: The cost of advertising is paid by the dealership to the car manufacturer and is included in the price they pay for the vehicle. If you see it tacked on as an additional charge, you may be getting double-charged and should ask for it to be removed.
- Interior and exterior protection fees: You do not need to spend $200-500 on making your car’s interior more stain resistant at the dealership. Even if you plan on being very messy, it’s easy to DIY with hardware store stain-resistant products. And “exterior protection” is just a $200 car wash–pass, please!
- Registration fees: You will have to pay to register your car, get a title, and get license plates–but you definitely don’t have to have this done at the dealership. You will save money if you go to the DMV yourself and file the necessary paperwork. Of course, if you are DMV-phobic, feel free to pay extra to avoid the lines.
- VIN etching fee: If the dealership offers (or tries to insist), say thanks but no thanks. You will pay less than a quarter of the price if you have your VIN etched into your windows elsewhere.