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Tuesday, May 28, 2024

Avoiding Unnecessary Car Dealer Fees

After you’ve negotiated the sales price of your new car, you might be surprised with a total due that is much higher than expected. While some of these charges are a legal requirement, others are strictly up to the dealer. When you understand the nature of these fees, you can often save money by getting the dealer to reduce or remove them.

Here are five such fees to watch for:

1. Preparation fees
These are fees that the dealer charges for preparing the vehicle for sale. They include things like removing protective coverings on the seats or doors and washing the car. You wouldn’t pay extra for a shirt because the salesperson folded it neatly on the rack, so unless the dealer has done something beyond basic preparation, you should refuse to pay this fee.

2. Documentation fees
This covers the cost of the paperwork the dealership must do when selling a car. Requirements vary by state, but the actual cost to the dealer is almost always well under $100. Learn your state’s requirements and don’t pay more than you have to.

3. Dealer-installed accessories and extended warranties
These are extras that you shouldn’t pay for unless you requested them. If you do want these extras, you should shop around to make sure that the price the dealer is charging is fair.

4. Floor plan fees
This is the fee charged by the dealer to keep the car in inventory. Just like the example above, you wouldn’t pay more for a shirt because they have the color you like in stock. Why would you do the same do a car?

5. Administrative fees
This one is tricky, because while it can sometimes be a catch-all that allows the dealer to make a few extra bucks, or it can be a legitimate expense charged by the manufacturer. Ask to see the invoice, and check it against the VIN number of the car you’re buying. If the admin fee is there as a line item, it’s a legitimate cost. If not, you should refuse to pay.