What Fees Should I Pay?
Once you’ve found the right car at the right price, it’s time to buy. But beware: the price you negotiate with the dealer is about to go up.
It’s not just the taxes and registration fees that will up the price - the dealer will try to include expensive fees and add-ons as well. The good news is that you can simply say no to most of these fees, and others can be negotiated so you pay less.
Dealers will often include fees and add-ons in the purchase price of the car. Don’t agree to pay anything before you sit down and read your paperwork carefully.
You will see several taxes and fees that are simply non-negotiable and required by the state you live in. These are usually sales tax and fees to license and register your car, which vary by state.
Beyond state-mandated fees, almost any other fee is negotiable, according to Claes Bell, a senior banking reporter for Bankrate.com who specializes in car-buying.
“Ultimately, you have the leverage,” Bell said. “They want to sell the car. You can always walk away at any time and say ‘I’m not willing to pay this fee.’ Dealers can be flexible on those, especially if they are motivated.”
Some of these negotiable fees include a doc prep fee and various dealer fees. Some states will cap doc fees, but in states where they are not regulated, they can be hundreds of dollars. Find out if your state caps these fees, and if it doesn’t, find out early on what the dealer charges and try to negotiate the dealer fees down to a more reasonable level. Anything under $100 would be a good deal for you, Bell says.
Dealers will also often hit buyers with fees known by any number of names: a shipping fee, a dealer preparation fee, a dealer fee. Whatever the name, these fees are also negotiable. Research other dealer’s fees and then you can use that information as a negotiation tool. If you find that all the dealers in your area have similar fees, you may be stuck paying them.
After all that, a dealer will still try to push add-ons and extras to your vehicle. That’s because research shows consumers have something called “decision fatigue.” If you have to make too many decisions, your brain effectively shuts off and your instinct is to simply say “yes” to everything in order to get through it. Dealers know you’ll be tired of making decisions, so they will leave the most costly add-ons and extras to the end of the negotiation.
Feel free to say “No” to all of these add-ons:
- Etching the vehicle identification number on windows: This may deter theft, but the dealer generally charges too much to do this. You can do this yourself with a kit for less than $30, far less than what you’ll pay at a dealership.
- Fabric protection: Buy some inexpensive fabric protector at a local home improvement store and do it yourself.
- Paint protection: You can buy wax, sealant or even film and apply it yourself, if you’re worried about scratches.
- Rustproofing and undercoating: These are generally not necessary, because most warranties cover rust and corrosion.
- Car alarm: Many vehicles come with a manufacturer’s car alarm, so a dealer’s is not necessary. If your car doesn’t already have one, you can go to an independent installer and save cash.
- Extended warranty: Consider this deal, but like with every other aspect of car buying, you can shop this price around. You don’t have to buy the extended warranty when you buy the car, so if the dealer’s price is the best, you can pick it up later.