Car Buying Tip #17 - Car Dealer Fees - Gonna Getcha

If you've ever purchased a vehicle from a dealer before, chances are you've seen some form of a fee that is usually not disclosed during negotiations, and pops up on the contract when it's time to sign.

There are four car dealer fees that you must know of before you buy:

1) Documentary Fee

If you ask the dealer what this fee is you'll get different answers from different people. Some will tell you it pays for doing your title work, pays for the receptionist, pays for the salaried employees, and a different mix of fixed expenses the dealer needs to pay each month. Well, what I tell people when they ask is that it's a non commissionable profit that is paid to the dealer.

Some dealers will actually use this money to pay for those fixed expenses, but the majority that I know will pay all dealership expenses from sales, service, parts and accessory profits, and that doc fee goes straight to owner. So if the doc fee is $300 per vehicle and the dealer sells 300 vehicles a month the owner makes $90,000. Pretty big money!

The dealerships I've worked for have charged between $50 and $395, and I have heard rumors of Florida dealers charging over $1000. If you're really looking to to get the best deal, this is a figure you'll definitely want to know prior to purchase.

By the way, this number is not negotiable! A dealer can reduce the amount from the sale price, but will not take this fee out of a retail deal. If they did they would risk a class action lawsuit from customers previously charged this fee. That could get expensive.

I have never seen a dealership not have a doc fee of some sort. This does not mean that some dealers won't have them, but honestly, it's so easy for a dealer to collect them, it wouldn't make financial sense to not charge one.

2) Destination Fees

You'll also hear about destination fees and prep fees for new vehicles, but these should be fees that are covered in your total vehicle invoice and are set from the manufacturer.

3) Market Adjustment Fees

Some dealers will have fees in addition to MSRP (not set by the manufacturer, but by the dealer) and will call these Addendums, Market Value Adjustments, etc. These fees are typically fluff and are the first things to go when negotiating.

Don't get me wrong, if you say nothing about these fees the dealer will certainly collect them from you, but it's pretty easy to get them to drop these. If I were you, I'd tell them to throw these fees out the window and would focus more on the MSRP and working that down near invoice.

These Market Adjustments for high end and limited supply vehicles are, at some dealerships, not negotiable, so be prepared. For instance, I know a lot of Chevy dealers that will post a $5000 addendum on Corvettes and they might cut that in half, but usually don't budge.

4) Dealer Prep Fees

These are not the dealer prep fees that may be included on the invoice, but a dealership trying to stuff additional fees, on top of the doc fee, into customers contracts. I know of dealerships that would include fees for paint treatments and window etching and they would call it a dealer prep fee. You might be surprised at how many customers would just sign away without questioning. You really need to review the contract carefully and make sure you're not having products you don't want stuffed into your financing.

If you've agreed to $10,000 plus fees, then your Out The Door amount should be $10,000 plus Tax, Title, License (if applicable), Doc Fee, and that's it.

Your best bet, to protect yourself, is to request an itemized break down of all the fees you will be signing for prior to going into the finance office. By doing this, you'll have plenty of unpressured time to review exactly what you're paying for and how much it is costing you.

Justin is the creator of http://www.InsiderCarBuyingTips.com He is a Car Buying, Bad Credit Repair and Auto Loan Finance authority. In addition to offering the most informative car buying tips on the Internet, he offers, direct to consumers, the least expensive A-(excellent) AM Best rated Extended Auto Warranties online and has partnered with the #1 auto loan refinance source.

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