Car Dealer Fees - Gonna Getcha'

Car Dealer Documentation Fee
& Other Hidden Charges


Car dealer fees can be not only frustrating, but can add up to be some pretty big bucks.

If you've ever purchased a vehicle from a car dealer before, chances are you've seen some sort fee, or maybe multiple fees, that are usually not disclosed during negotiations.

Like David Copperfield these fees just magically appear when it's time to sign your contract.

Here's a list of four very common car dealer fees. You're almost guaranteed to run into one of these, so you may want to ask about them upfront...


Dealer
Documentation Fee

If you ask the salesman or finance manager what this fee is you'll get different answers from different people.

Some will tell you it pays for doing your title work, pays for the receptionist, pays for the salaried employees, and a different mix of fixed expenses the dealer needs to pay each month.

To some degree that's true, but what I tell people when they ask is that it's a non commissionable profit that is paid to the dealership owner.

Some dealers will actually use this money to pay for those fixed expenses, but the majority that I know will pay all dealership expenses from sales, service, parts and accessory profits, and that documentation fee, or doc fee, goes straight to owner.

For instance, if the dealer documentation fee is $300 per vehicle and the dealer sells 300 vehicles a month the owner makes $90,000. Pretty big money!

The dealerships I've worked for have charged between $50 and $395, with the $300 - $400 range being the most common.

I have heard rumors of Florida car dealers charging over $1000...Ouch!


Not Negotiable

By the way, this number is not negotiable! A dealer can reduce the amount from the sale price, but will not take this fee out of a retail deal.

If they did remove it from the deal they would risk a class action lawsuit from customers previously charged this fee. That could get expensive.

Of all the car dealer fees this is by far the most common. I have never seen a dealership that did not charge a documentation fee of some sort.

This does not mean that some dealers won't have this car buying fee, but honestly, it's so easy for a dealer to collect them, it wouldn't make financial sense to not charge one.



Dealer
Destination Fees

Destination fees should not be in addition to your purchase price. These are fees set by the manufacturer and are worked into the total invoice price.

If you never saw the invoice for the new vehicle you are buying, then you wouldn't even know this fee was there.

What you'll want to watch out for is #3 below. Sometimes a dealer may refer to those fees as destination fees.


Market
Adjustment Fees

These car dealer fees are in addition to MSRP (not set by the manufacturer, but by the dealer) and are also referred to as Addendums, Market Value Adjustments, sometimes Destination Fees, etc. These fees are typically fluff and are the first things to go when negotiating.

Don't get me wrong, if you say nothing about these fees the dealer will certainly collect them from you, but it's pretty easy to get them to drop these.

These Market Adjustments for high end and limited supply vehicles are, at some dealerships, not negotiable, so be prepared.

For instance, I know a lot of Chevy dealers that will post a $5000 addendum on Corvettes and they might cut that in half, but usually don't budge.



Dealer
Prep Fees

These are not the dealer prep fees that may be included on the invoice, but a dealership trying to stuff additional fees, on top of the doc fee, into customers contracts.

I know of dealerships that would include fees for paint treatments and window etching and they would call it a dealer prep fee. They would pawn it off as a part of the sale and not for what it really was, an optional product for you to purchase.

You might be surprised at how many customers would just sign away without questioning. You'll really want to review the contract carefully and make sure you're not having products you don't want stuffed into your financing.

If you've agreed to $10,000 plus fees, then your Out The Door amount should be $10,000 plus Tax, Title, License (if applicable), Doc Fee, and that's it.


To Sum This Up

Your best bet, to protect yourself against unwanted car dealer fees, is to request an itemized break down of all the fees you will be signing for prior to going into the finance office.

By doing this, you'll have plenty of unpressured time to review exactly what you're paying for and how much it is costing you.

A great way to save a bunch of time and money is to Get FREE quotes from Yahoo! Autos You'll get up to four competing quotes from local dealers and most of the "fluff" car dealer fees are quickly done away with in order for them to stay competitive. Still be sure to ask what additional fees may apply before you go.

The only of the car dealer fees that you may encounter is the car dealer documentation fee, but your savings will easily cover that.


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