Purchasing a new car can be stressful, but understanding which fees are legitimate and which you can negotiate or decline will save you money. Here's how to identify, contest, and avoid unnecessary charges at the dealership.

1. Legitimate Costs (Unavoidable Fees)

• Documentation or Conveyance Charges:
• What it is: Covers processing title, registration, and other paperwork.

• What to do: These fees are often inflated. Ask for a discount or request dealer-installed extras like floor mats in return.

• Registration Charges:

• What it is: A fee for registering your vehicle with the state.

• What to do: Check your state’s Department of Motor Vehicles (DMV) website for the exact cost. Contest any additional charges added by the dealer for convenience.

• Sales Tax:

• What it is: Most states charge a sales tax based on the purchase price.
• What to do: Use trade-in value and rebates to reduce the taxable amount. Confirm whether your state calculates sales tax on the net cost (post-incentives and trade-in) or gross cost (negotiated car price).

2. Fees You Should Contest (Negotiable Costs)

• Advertising Fees:
• What it is: Dealers may add fees to recoup the cost of advertising campaigns.

• What to do: Refuse to pay. Advertising is part of the car's sticker price.

• Delivery and Preparation Fees:

• What it is: Extra charges for inspecting and prepping the vehicle.

• What to do: These tasks are already covered by the mandatory destination charge, which includes a full tank of gas. Insist on removing these fees.

• Market Adjustment Fees:

• What it is: Additional charges for in-demand models.

• What to do: Negotiate. These fees aren’t mandatory. Walk away if the dealer refuses to budge, especially if the markup is significant.

• Loan Payment Fees:

• What it is: Fees tied to automaker-financed loans (e.g., charges for phone payments).
• What to do: Read the payment terms carefully and compare the automaker’s financing to rates offered by your bank or credit union.

3. Unnecessary Add-Ons (Skip These Dealer Services)

• VIN Etching:
• What it is: Etching the vehicle identification number (VIN) onto the car’s glass as an anti-theft measure.

• What to do: Skip this dealer add-on and do it yourself with a kit (~$20) or have a local mechanic handle it for less.

• Extended Warranties:

• What it is: Coverage for repairs after the manufacturer's warranty expires.

• What to do: Avoid these costly warranties. Instead, buy a reliable vehicle and set aside an emergency fund for potential repairs.

• Disability and Life Insurance:

• What it is: Policies to help pay off your loan if you’re injured or pass away.

• What to do: Obtain similar coverage through your primary insurance provider, typically for a lower cost.

• Rustproofing, Paint Sealing, and Fabric Protection:

• What it is: Services to protect the car’s exterior and interior.
• What to do: Decline these services. Today’s cars are designed to resist corrosion, and the treatments are unnecessary. Regular waxing and fabric protectants are more cost-effective.

4. General Tips to Avoid Extra Costs

• Research in Advance:

• Know your state’s tax and registration costs. Use online tools to estimate the total cost of buying the car.

• Request an Itemized Bill:

• Don’t rely on bundled fees. Ask for a detailed breakdown and compare it to your research.

• Be Willing to Walk Away:

• If a dealer won’t negotiate or tries to pressure you, walk out and find another dealership.

• Shop Around:

• Get quotes from multiple dealerships to compare fees and offers.

Summing it up

While some fees are unavoidable, many can be negotiated or declined entirely. Being informed, assertive, and ready to walk away will put you in control and save you money during the car-buying process.

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