New cars are expensive. When you’ve finally negotiated the sticker price down to something you’re happy with, you’re suddenly paying more after the addition of associated fees. Here’s what you need to know about those fees – and whether or not you really need to pay them.
Auto manufacturers charge delivery fees to cover what it cost them to deliver your new car to the dealership. These are non-negotiable, and you have to pay them. Sometimes they’re called “destination” or “dealer prep” charges, and you can find the cost on the window sticker of the car. If you find any other charges listed, which may be on a second window sticker, that’s a delivery charge added by the dealership. You should not have to pay a second delivery charge, so refuse it.
Title and Registration Fee
The dealership will arrange with your state’s motor vehicle department to get your car’s title, registration, and license plates. Since they’re handling that leg work for you, you have to pay it. This fee is actually a fixed fee that’s set by your state. To make sure you’re not paying too much, find out what the state’s fixed fee actually is, and refuse to pay any additional amount for your title and registration.
The documentation fee is something that the dealership charges you for handling all your paperwork with the state. It’s in addition to the title and registration fee, but it is not mandatory. Sometimes your state limits what a dealership can charge for this, but you may pay anywhere from $50 to $500. If you’re charged a documentation fee, refuse to pay it. If the dealership won’t budge, ask the price of your vehicle to be reduced by the same amount or as close to it as possible.
State Sales Tax
State sales tax is, of course, mandatory. The state decides what percentage the sales tax is, and they determine how it’s calculated. Some states require sales tax to be paid on the full cost of your new vehicle. Others allow sales tax to be calculated on the cost of the car after you subtract your down payment or the value of your trade-in.
Auto manufacturers advertise their cars in national outlets like television and radio, and they charge dealerships for a part of the cost. Sometimes dealerships will pass at least some of that charge onto you with an advertising fee, and the fee may be shown in a window sticker. You may also be paying for local advertising. This fee is not mandatory, so contest it and try to have it removed.
Possible Additional Fees
Dealerships many include a number of other fees when you pay for your vehicle, and most of them are completely unnecessary and only attempts to make more of a profit off the sale. If you see any of the following fees, refuse to pay them: Credit life insurance, disability insurance, pin-striping, rust-proofing, undercoating, VIN etching, fabric protection, and paint sealant.