Fees to watch for when car shopping
No one likes to get socked by hefty hidden fees when it comes to buying anything and that’s especially true if you’re shopping for a car or truck that’s already priced around $40,000, or even considerably more.
Paint protection at more than $900? I don’t think so.
While many consumers research rebates and shop for deals on interest rates, they aren’t reviewing a long list of potential fees and add-ons before buying a car or truck. All extra costs aren’t set in stone.
Ideally, you want to be able to spot fees that can be reduced or even eliminated as part of the transaction. Socalled “dealer-installed options” or addons, surprisingly, can drive up your cost by more than $1,200 or $1,500.
“New vehicles don’t make a lot of profit for dealerships. They tend to make more money on used cars and the maintenance department,” said Ronald Montoya, senior consumer advice editor and content strategy for Edmunds.com.
Dealer-installed add-on items can be extremely lucrative for the dealership and boost the bottom line.
Oddly enough, I spotted one dealer at one point this spring adding nearly $1,000 to an SUV’s price for some sort of paint protection. And yes, you can negotiate to reduce or eliminate that fee, even if the dealer says every car on the lot has that add-on.
Take a hard look at what you might be charged for dealer-installed options, such as an interior protection package for the vehicle’s upholstery, nitrogen in tires, window tinting, chrome-plated wheels, all-season floor mats, wheel locks, cargo trays and alarm systems. If you want such items, and they’re reasonably priced, you might agree to it. Otherwise, experts say, you should question extra fees for something you don’t want or need.
Consumer watchdogs are increasingly concerned about these add-ons and would like to see the Federal Trade Commission write rules that say all extra fees need to be included in the upfront price of the car so no one is taken by surprise when they’re doing the final paperwork.
In some cases, different consumers might even be charged different prices for the same add-on option – often resulting in discrimination against consumers of color, according to recommendations for tougher regulations made by consumer groups in 2022 to the FTC.
“Consumers cannot readily ascertain when fees and products are inflated, tacked on, and misrepresented,” according to the comments made in 2022 by a long list of consumer groups, including PIRG, the Consumer Federation of America and Consumer Reports.
“The lengthy, document-heavy nature of a vehicle purchase transaction is fertile ground for deceptive behavior, and arming consumers with more information at the outset will enable them to better navigate this process and negotiate a fairer deal,” according to the consumer groups.
Montoya, who once had a part-time job at an auto dealership, has tracked many of these fees, including the practice by many dealers to install all-season floor mats that can add a few hundred dollars to the price of the car. Consumers should try to negotiate on many fees but realize that there are some that you’ll be stuck paying. Car buyers should shop different dealerships, he said, to see who is charging what when it comes to dealer add-ons.
One way to start negotiations: Look carefully at each line item in an offer and question what the cost is covering. If you don’t understand what a fee covers, ask.
While many consumers shop online for cars or trucks, Montoya said, they’re often not seeing the whole story when it comes to costly fees. The “supplemental sticker” often isn’t going to show up when you research a car or truck’s price online at the dealership’s website.
One tip: If you know what car you’d like to buy, call the dealership and ask whether that vehicle is equipped with any dealer add-ons. Ask the salesperson to show you the kind of car you want without add-ons. If the dealer has installed these extras on every car, Edmunds.com advises, take time to see whether other dealers in the area do the same. You might want to shop somewhere else.
How much can car dealers charge for documents?
It’s highly unlikely that you’re going to be able to reduce or eliminate a fee called “dealer/doc.”
It’s important to realize that documentary preparation fees often are capped by state law in some but not all states, according to Ed Mierzwinski, senior director for U.S. PIRG’s federal consumer program.
PIRG is part of a coalition that is pushing to get the FTC to mandate that doc fees, and other costs, be disclosed upfront, not at the tail end of the transaction.
Documentary preparation fees can vary based on the state where you live.
If you’re in a state where doc fees aren’t regulated, know that some dealerships may offer a great price on a car or truck but then drive up your real cost by adding a high doc fee to the contract.
What other fees should you negotiate or reject?
Some dealerships may try to charge a fee to cover advertising, Mierzwinski said. He maintains this amount should be included in their cost of the car already. His advice: Reject.
Dealer prep fees? “To wash and vacuum. Nope,” Mierzwinski said.
Tax, title and registration? “Title and registration shouldn’t be much and shouldn’t be marked up,” Mierzwinski said.
“I think any fee can be negotiated, but the dealership will look at the total and see if it meets their requirements for profit,” Mierzwinski said.