Watch Out for These Car Buying Fees

Car buying fees can be both frustrating and expensive as you set out to buy a new car. Even worse, many fees can come as a real surprise. The fees often go undiscovered until the last minute when the finance manager draws up your contract. It is critical you are aware of these charges in advance to protect yourself.

While some fees are non-negotiable, others are added by the dealership purely to pad their profits. You can spend hours negotiating the best price on a new car only to find out later that hundreds of dollars in fees have been added to the contract. Here is what you need to know to prevent this from happening to you...

The best way to protect yourself from car buying fees is to take the time to read your contract and see exactly what you are paying for. In the car world, the contract is usually called the buyers order. Buyer's orders are legal documents and every cost associated with your sale should have a separate invoice line and description.

Take the time to go through your buyer's order line by line. Some of the fees hiding in there just should not be as high as they are – and most people don’t take the time to look because they are excited to get their cars. Understand that once you sign and drive away it is too late.

There are a broad group of standard costs that car dealerships often markup. These include the manufacturers suggested retail price (MSRP), the destination charge, and the cost of factory add-on features like floor mats and pin stripes. It is easy to find the true cost of these items from the manufacturer's website. Simply select the model you are buying and add the additional features. The website will tell you exactly what you should pay. If you notice your dealer is charging more then tell them you want the price changed. Dealer markup is simply a sneaky way for the dealer to make money. These fees can range anywhere from a couple of hundred dollars to several thousand dollars.

Advertising fees are also something to pay attention to. Today’s car buyers often buy through websites like Cars.com and when you choose a discount car website you avoid these ad fees. But car manufacturers do charge their dealers for their ad campaigns, both local and the national advertising campaigns. You’ve certainly seen the commercials and maybe that’s what got you in the door in the first place. While you may have to pay this fee it should not be more than two hundred dollars. A higher fee is a sign of a dealership trying to make money with additional car buying fees.

Dealer Prep fees are passed off as a charge to get your car ready for sale. The car dealership gets your car ready for sale by vacuuming it, taking the plastic covers off of the seats and other cleaning work such as washing the car. This is generally done by maintenance crew people. Some dealers will charge hundreds of dollars for this service and this is one way they make money. You should never pay a dealer prep fee as it is included in price calculation of the MSRP.

Almost every buyer's order will include a Document Fee. This is billed as the cost to prepare and file your paperwork. While there is significant documentation involved with a car sale, the fact that this work is done by secretaries and salaried managers means it probably costs the dealership less than $50 per deal. If you notice a document fee above $150 then you are well within your right to ask for a lower price. Even at $150 the dealership is still making money on this line.

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