Do I Have to Pay Dealer Fees?
The price you pay for your car includes dealer fees. Most are negotiable, but not all. Here's what you need to know about dealer fees.
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The price you pay for your car includes dealer fees. Most are negotiable, but not all. Here's what you need to know about dealer fees.
The price you pay for your car includes dealer fees. This isn't one fee, but rather a range of fees charged by the dealership. Since they can add a good chunk to the total price of your vehicle, you may be wondering if you have to pay these fees. That all depends on the fee in question. Here are some of the most common dealer fees and whether they're required or negotiable.
Sales Tax
Short Answer: This one isn't negotiable.
If you live in a state that charges sales tax, then you are required to pay this fee. The amount is set by your state, so the dealer can't reduce or remove this fee from your purchase. Note that in some states you may be able to pay your sales tax when you arrive at the Department of Motor Vehicles (DMV) to register your car, but you still have to pay it one way or another.
Destination Fees
Short Answer: You can ask, but these likely won't be negotiable.
The destination fee isn't set by the dealer, but by the automaker. It's what they charge the dealer to get the car shipped from wherever it was built to the dealer's lot. The dealer passes the cost directly onto you, and it can be hefty. While you can ask to have this removed or reduced, it's unusual for a dealership to waive even a part of this fee.
Transport Fees
Short Answer: You may be able to negotiate these.
You may see this fee if your dealer had to have your car shipped from another nearby dealership. This is in addition to the usual destination fee charged for every car. Unlike the destination fee, there is room to negotiate and have this fee reduced or removed.
Title Fees
Short Answer: These could be negotiable.
Every vehicle needs to have a title to be legally registered with the state. This requires filling out forms and paying associated fees. The dealership fills out this paperwork and provides you with the necessary documentation. It also pays the fees, which it will often pass onto you. Since title fees are nominal, you can ask the dealer to pay the fee without passing it to you, and they may agree.
Registration Fees
Short Answer: You will likely have to pay these.
These fees are required by the state, so the dealership has no control over the amounts charged. The rules on registering a car vary from one state to the next. Some require owners to register their vehicles themselves, while others require the dealership to send in the necessary documentation. If the dealer sends in the registration and pays the fees, then they will charge you whatever they paid to cover the cost. It's not likely, but it is possible that the dealer will cover these fees for you.
Inspection Fees
Short Answer: You may be able to negotiate, but only if the dealership inspected the car for you.
This is the fee charged for inspecting your car. Even a new car needs to be officially inspected, and many dealerships will do this for you so you don't need to make time to have it done on your own. It's a courtesy at some dealerships when you buy a car, while others will charge for the inspection. This is definitely one to ask about, as they may be willing to waive the fee for this service since so many dealers do it for free.
Documentation Fee
Short Answer: You may be able to negotiate this.
This fee covers the effort of completing the myriad forms and documents that need to be filled out to purchase a car. The amount the dealership charges can vary greatly. Some states have imposed limits on how much a dealership may charge for its documentation fees, but not all states impose limits. You can absolutely try to haggle this fee down or even have it removed completely.
Advertising Fee
Short Answer: This can be negotiable.
All of those ads you see for your local dealership cost money, whether they're fliers in the mail, ads on the radio or television, or billboards on the highway. Some dealerships charge an advertising fee on every car they sell to help offset these costs. This is a negotiable fee, and if you ask about it, you may be able to have it not just reduced but completely removed.
Dealer Preparation Fee
Short Answer: You may be able to negotiate this.
This is a fee charged by the dealership to get your car ready for you to drive home. It covers washing the outside, removing protective plastics from interior and exterior surfaces, and generally making sure your car looks just right. This is another fee you may be able to negotiate away.
Market Adjustment Fee
Short Answer: This can be negotiable.
If you see this fee, which sometimes appears right on the window sticker, then get ready to negotiate. It's designed to cover a wide range of variables, from high demand for a certain vehicle to short supply. Not every dealer will charge this type of fee, which means they may be more likely to reduce or remove it rather than risk losing your business to a dealership not charging this fee.
These are just some of the dealer fees you may encounter when you buy a car. While some, like sales tax, are unavoidable, most have some room to negotiate. You can't simply refuse to pay a fee, but there's no reason not to ask about removing or reducing any dealer fee. If you see one you don't understand, then ask what it is and if it can be waived. The worst they can say is no, but they may also agree to remove it so you can keep more of your cash in your pocket.
