If the thought of negotiating the fees for a new car at a dealership makes you break out in hives, remember that research is your best friend. Before you shop, know which fees you have to pay, which ones you can negotiate, and which ones you can avoid altogether.
Dealer fees you can’t avoid
Don’t expect a dealership to budge on charging you sales tax and registration (or license) fees. Registration fees cover the process of registering your vehicle with your state, ordering a license plate, and placing the car’s title in your name. Sales taxes vary by state and municipality, while registration and license fees typically amount to 1 percent to 3 percent of the vehicle’s total cost.
Document fees are charged for the handling of the your registration services. Some states limit the amount that can be charged, while in others, there’s little regulation. Also, some dealerships charge an unmovable, standard rate, which means you won’t be able to negotiate the price. Depending your car model and the state you live in, expect an average document fee to run you anywhere from $100 to $500. If you’re asked to pay significantly more, try to negotiate a lower price for the vehicle to offset the cost.
Another unavoidable fee is the destination charge, or what the automaker charges for delivering the vehicle from the factory to the dealership, including a full tank of gas. Since the fee covers an overhead cost for the dealership, it’s pretty much non-negotiable. The amount usually isn’t factored into the sale price of the vehicle, so make sure to ask. Destination fees typically range from $900 to $1,200, per True Car Advisor.
Fees to negotiate—or avoid
If a dealer insists on any of the following fees, it might be a good idea to walk away or shop around further. That said, the expected total cost of the vehicle—including fees—should be your focus in these negotiations. For maximum flexibility at the bargaining table, remember you can always make up the difference on a fee by demanding a lower sticker price for the car. However, some of these charges are just plain old money grabs that should be contested.
Some dealers will try to add a few hundred dollars to your tab to offset the cost of national or regional advertising campaigns. However, this cost should be already included in the sticker price, and not a surprise add-on to your final bill.
Dealer preparation fee
Sometimes a dealer will tack on several hundred dollars for the “service” of getting your car ready to be driven off the lot after you buy the vehicle. Also known as a “delivery fee,” the service might include a tune-up or car wash, but what you pay is vastly inflated and redundant—especially if you’re buying a brand-new car. Unless you’re having the car delivered to your home, the destination charge should already cover the expense of having the car presented to you on the lot.
Loan payment fees
If you finance your car through the dealership, beware of fees associated with servicing the loan. Sometimes you can be charged a transaction or service fee for simply making on-time payments. Don’t be rushed into financing, and read the fine print carefully to understand the loan payment terms.
Market adjustment fee
If you’re buying a popular vehicle model that’s in short supply, the dealership might tack on a market adjustment fee, which can cost you thousands of dollars. If the vehicle is in demand, you’ll unfortunately have less luck negotiating away this fee. Still, you could ask for a discount if it’s a make-or-break price that’s just over your budget.
Aside from fees, stay away from these dealership add-ons, which either offer poor value, are redundant with other services, or will cost less if you get them taken care of somewhere else.
To deter theft, dealerships will offer to etch your car’s Vehicle Identification Number (V.I.N.) into the window of your car as a theft deterrent, usually for a couple hundred bucks. Even though etching can potentially get you discount on your car insurance, it’s a bad deal at that price—especially as some police forces will do it for free.
Disability and life insurance
You almost certainly can get cheaper coverage (if you’re not covered already) through your home, car, or life insurer than a car dealership.
Paint sealing, rustproofing, or fabric protection
Remember that “TruCoat” scene in Fargo? Cars are built to last, and they don’t require additional treatments like paint sealants or fabric sprays. These add-ons also tend to cost hundreds of dollars.
Extended warranties and maintenance plans
Dealership warranties tend to be expensive and, once you get into the fine print, you’ll realize they offer limited or redundant benefits. Consumer Reports suggests keeping a topped-up emergency fund instead—although if the peace-of-mind fits your budget, there’s nothing stopping you from buying an extended warranty, either. At least consider the pros and cons, first.