Top Menu

Beware of the Car Dealer Fees and Hidden Costs

You decided it is time to buy a new car and you have done your research and determined your budget. Then you are blind sided by the car dealer fees and hidden costs. When buying new cars or used cars there are always those unexpected car dealer fees when buying a car. To help you better be prepared go through the following list of unavoidable and car dealer imposed hidden costs and car buying fees.

Unavoidable Car Dealer Fees and Costs

Sales Tax: This is one fee when buying a car that there is no way around. It doesn’t matter where you live you are going to have to pay sales tax on you car purchase. The sales tax will be calculated at the percentage rate of the state and county where you live and not where you buy. It will be based on the price of the car along with any accessories or extras. However in many states there is a clause that let’s you deduct the amount of your trade-in from the new car purchased and then that is the amount that is used to calculate your sales tax. So if you are trading in a newer car it could substantially reduce your sales tax. Other than that sales tax is one car buying fee you can’t avoid.

Hidden Car Dealer Fees

Doc Fee or Dealer Documentation Fee: If you have never heard of this car buying fee it is an amount that the state of the car dealership selling the new or used car is allowed to charge you for processing documents. The amount of this fee is regulated by the state in which the car dealer does business. This fees ranges quite a bit based on the state. I have seen Doc Fees from around hundred dollars up to $800. This may sound like a car dealer scam, but it is legal and one car buying fee that is unavoidable so remember to include it in you car buying budget.

car dealer fees and hidden costs of buying a carLicense and Title: License plates is one car buying fee that doesn’t need too much explanation. If you buy a new or used car you will to need to allow for the expense of license plates. In some states you can transfer the plates from your trade-in to your new car so check with your local state for the amount of this car buying fee to use for your budget. Next is the title fee, this is usually include in your license fee if you have your title or if a lender still holds your title. However if you lost your title you will need to pay a lost title fee so the dealer can process the paperwork to get a new title. The amount of the lost title charge varies by state, but if you lost your title you will need to make allowance for this fee when buying a car.

Local Tax: Some counties and states have a local tax that doesn’t amount to much, but it is still something that you should be aware of because it is a required car buying fee. Usually this fee is when you are buying new cars and it is between $10 and $25, but it will be tacked on to your new car purchase no matter if you want to pay it or not. Usually this local tax is only on new cars, but it depends on your local state and county.

Insurance: If you are going to buy a new car never assume that your car insurance will cost almost the same as the old car. This is not a charge that you pay at the car dealer when you are buying new cars, but when you contact your insurance agent after your purchase you may be surprised. Obviously this is not a car buying fee, but it is something you need to research before you buy a new car. Your car insurance is more of a hidden cost rather that a fee when buying a car so check with your insurance agent as part of your car buying homework.

Dealer Imposed Car Dealer Fees and Hidden Costs

The following are car dealer fees that are not required by law, but car dealers may try to add these charges to your car purchase both with and without your knowledge or permission. Being aware of these car dealer fees when buying a car and knowing what is legal and what is a bogus car dealer charge can help save you quite a few bucks.

Dealer Preparation: Commonly know as a dealer prep fee or dealer preparation was once a standard charge for the new car buyer to prepare a new car for delivery. In an effort by the manufacturers to eliminate car dealer scams Dealer Prep is now included in the price of the car (the car maker pays the car dealer to prep the car). I don’t recommend paying any type of dealer prep fee when buying a new or used car. If you stand your ground the car dealer will usually remove this car buying fee, if not maybe you should be shopping at a different dealer.

Window Etching: You will find car dealers that will add this car dealer fee into every new car purchased. They will etch the windows on every new car and then try to charge you for this service. This more of a car dealer scam rather than a car buying fee. If you really want car window etching (click the link and think again). Check the paperwork and refuse to pay for car window etching.

Extended Car Warranties: This is not a car buying fee, but it can be a hidden cost of buying a car. If an extended warranty for your new car is important to you click extended warranty and read the article before you decide. Some car dealers have been known to add in an extended car warranty as a way to make additional profit. Check your paperwork for any extended warranty charges or car dealer fees and be sure that you are buying what you agreed to buy.

Service Contracts or Agreements: Service contracts or service agreements are not required car buying fees, but car dealers will very often do their best to add this to your contract and make additional profit and commission. Check the numbers before signing  for any service agreements or contracts.

Rustproofing, Undercoating, Paint Protection or Fabric Protection: Obviously these are extras and add-ons that car dealers want you to buy, but when you are using  dealership financing they may add these on to your bill of sale because they may only change your monthly payment by a few dollars. This a car dealer fee trick or scam and not a car buying fee. Read and question everything before you sign on the line!

Insurance-Life and Disability: Just like some of the others above Auto Loan Life Insurance and Disability is not a required fee when buying a car. Not even a lender can require life or disability insurance. This a car dealer fee that they say is stipulation of a car loan or purchase, so don’t sign for these items.

The Hidden Costs and Car Dealer Fees When Buying a Car – You Decide

So you can see that there are plenty of car buying fees that are required by state and local governments, but there are many others that car dealers would like to make you think are necessary fees when buying a car. Know the difference between the required car buying fees and the car dealer fees can save you a bundle in the long run. Do your homework and research before you become the victim of a car buying scam and follow the steps to buy a car.

Get the Newsletter for more Answers to Your Car Buying Questions and the Car Buying Process.


Popular Car Buying Articles
Car Buying How To Logo

Look Out for the Car Dealer
Fees and Hidden Costs

The Car Buying Guide
Returning Car to Dealer 72 Hours
72 Hour Return Rule
for Buying Cars
steps_buying_car
Quick Steps to Buying a New Car
car_dealer_tricks
10 Dirty Car Dealer Tricks
car-salesman
Why the Car Salesman
Screws You

, , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

2 Responses to Beware of the Car Dealer Fees and Hidden Costs

  1. Cheryl May 30 at 8:02 pm #

    How negotiable are the doc fees?

  2. Jim June 4 at 7:26 pm #

    Rarely if ever are Doc Fees negotiable. They are usually limited by the state where the dealerships does business and made to pay for doing title and paperwork.

Leave a Reply

Powered by WordPress. Designed by Woo Themes