What are Dealer Fees?
Dealer fees add to the price of your car. Some are required while others are optional. Here's a rundown of the more common dealer fees you may see.
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Dealer fees add to the price of your car. Some are required while others are optional. Here's a rundown of the more common dealer fees you may see.
Dealer fees are added to the price of your car and increase the total amount you pay for your vehicle. There is a wide range of fees you may see listed, some of which are required for compliance with state laws, while others are dealer-specific. Here's a rundown of some of the more common dealer fees, how much you can expect to pay, and what each includes.
Sales Tax
Unless you live in a state that does not collect sales tax, you will need to pay this fee. The amount varies depending on the state in which you live. This isn't an optional fee. You must pay the sales tax to register your car. Some states may allow you to pay this fee when you arrive at the Department of Motor Vehicles (DMV) to process your registration, while others require collection at the time of sale. A few states, including New Hampshire and Delaware, don't charge a sales tax at all. In Alabama, it's only 2%, but in Nevada, it's 8.25%. This can add thousands of dollars to your total cost, so budget accordingly.
Title Fees
A title proves legal ownership of a vehicle. It includes forms you must file with the state before you can register your vehicle. The state charges filing fees that the dealer will pass along to you. The cost for a title varies, with rates as low as $5 in Hawaii up to $164.50 in Wisconsin.
Registration Fees
The process of registering a vehicle varies between states. Some require the dealership to file the registration paperwork and collect the fee at the time of sale. In these cases, you will see this as a dealer fee. Costs for registering a vehicle cover a wide range, with a flat rate of $20 in Georgia and amounts rising into the thousands in states where the fee is based partly on the value of the vehicle, as is the case in New Hampshire.
Inspection Fees
Often, a dealership will take care of your inspection, so you don't have to make an appointment for an authorized facility to inspect your car. Depending on the dealership, that inspection may be free, or it may show up as another dealer fee. States don't always mandate that cost, so the charge can even vary within your state. According to Compare.com, you can expect to pay at least $15 or up to $50 with additional inspection fees if an emissions test is a part of the process in your state.
Documentation Fee
There's a lot of paperwork involved when you buy or sell a vehicle. This fee helps cover the cost of preparing and submitting all those papers. Those documents include title and registration paperwork, as well as any forms to prove you paid the required sales tax. This fee is sometimes limited by the state. Compare.com also notes that In Arkansas, there's a maximum allowed charge of $129, while Illinois has a cap of $300. Other states impose no limit, which allows dealers to charge as much as they choose. Depending on the dealer, it could be hundreds of dollars. You can try to negotiate this fee to have it lowered or eliminated.
Destination Fee
This is an amount set by the automaker. It's charged to the dealership for bringing the car from wherever it was built to the dealer's lot. That fee gets passed onto you. Destination fees have been on the rise and vary not just from one automaker to the next, but even between cars from the same automaker. On the low end, you'll pay around $900, but the fee can rise to several thousand dollars.
Transportation Fee
This fee covers the cost of getting your car from one dealership to another when the car you want is in stock on another dealer's lot. This fee is not required and may be negotiated. If it's a close swap, then the fee may be less than $100, but a long distance could see it climb to several hundred. It all depends on your dealer for the amount of this one.
Advertising Fee
To help cover the cost of advertising, some dealerships charge an advertising fee. The amount varies from one dealer to the next, and it's not something every dealership charges. The fee could be a few hundred, but some dealers may charge several thousand. It's also a fee that's often negotiable, so it's worth asking to see if they'll remove this one.
Dealer Preparation Fee
When a car arrives at a dealership, it's not quite ready for the customer. It needs to be washed and prepped before they can transfer it to you. This is a negotiable fee that the dealer charges simply to get your vehicle ready for you. You can expect for this fee to run from $100 to $500 on average.
Market Adjustment Fee
There are all sorts of reasons why a dealership will add this fee, and it can be quite high depending on the circumstances. It can be added to the price of a vehicle simply because it's in high demand. It could also be added if there's a shortage of a particular vehicle. This fee is negotiable and is not something every dealership will charge. The numbers on this fee may swing wildly. It may be only a few hundred dollars, but in the right conditions, it could be as much as $5,000 or even $10,000.
These are some of the more common dealer fees you may encounter when buying a car. While some are required, others are optional, so ask to see what the dealer is willing to eliminate. If you see a fee you don't understand, then ask for an explanation. Dealer fees can add up quickly, so it's important to know exactly what you're paying and why when you purchase a car.
