When you walk into a dealership to buy a car, the sticker price looks as normal as a supermarket price tag. But dealers have mastered the art of padding their profits with additional charges. These dealership fees can add hundreds to thousands of dollars to your sale price.
Don’t be a sucker for the sticker price. Discover eight fees to never pay a car dealership and which fees are normal. Then, we’ll reveal how you can buy a car without paying any dealership fees.
Dealer preparation fees cover basic tasks such as washing the car, removing protective coverings, adding a full tank of gas, checking fluid levels, and installing dealer badges.
Vehicle preparation is a business cost that’s already built into the vehicle’s sale price. Just as a restaurant doesn’t charge you for washing dishes or a store doesn’t bill you for stocking shelves, a dealer shouldn’t charge you for basic business operations.
Ask for a detailed breakdown of the prep fee and challenge its necessity. Many dealers will remove it if pressed. If they won’t budge, walk away. Plenty of other dealers will be willing to negotiate this additional charge.
Vehicle identification number (VIN) etching is when dealers engrave your car’s unique identification number into the windows. They claim this deters theft since criminals would need to replace all the glass before selling the car.
VIN etching is actually useful, but dealer prices are inflated. The process is simple and can be done for a fraction of the cost.
Decline the dealer’s VIN etching service. If you want this anti-theft product, either check with your local police department about free etching events or purchase a DIY kit online (about $25).
An advertising fee is a charge dealers add to cover their marketing expenses. This additional charge supposedly covers costs for TV commercials, radio spots, billboards, and digital marketing that helped you find their dealership.
Marketing is a basic cost of running a business. The dealer’s advertising budget is already factored into their sale prices and profit margins.
Simply refuse to pay it. When negotiating your purchase price, make it clear that you won’t accept advertising fees in the final contract. If the dealer insists, you can find another dealership that doesn’t charge this fee.
Market adjustment pricing is a markup above the manufacturer’s suggested retail price (MSRP). Dealers add these markups when they believe market conditions allow them to charge more (especially for high-demand vehicles).
While supply and demand affect prices, market adjustments are profit grabs. The manufacturer has already set a fair price with MSRP, which includes profit margins for the dealer. Any markup above MSRP is excessive.
Shop multiple dealerships and be willing to travel or wait. Many dealers will still sell at MSRP. If you can’t find a car at the right price, wait until demand cools or look at similar models with less demand and no markup.
An extended warranty (or vehicle service contract), covers repairs after the manufacturer’s warranty expires. Dealers push these because they are quite profitable.
Most modern vehicles are reliable well beyond the factory warranty. When you do need coverage, you can purchase third-party warranties for far less than dealer prices. Plus, the money saved by skipping the warranty will cover most repairs.
Decline it at the dealership. If you want extended coverage, research third-party warranty companies after your purchase. You’ll find better coverage for less money without the dealer markup.
Guaranteed asset protection (GAP) insurance covers the difference between what you owe on your auto loan and what your car is worth if it’s totaled.
While GAP insurance can be valuable, dealer-sold policies are overpriced. Your auto insurance company or bank probably offers the same coverage for a fraction of the cost.
Skip the dealer’s offer and shop for GAP insurance through your auto insurance provider or bank. You’ll typically pay half the dealer’s price for identical coverage.
GAP insurance also isn’t necessary in most cases if you can put 20% down in cash. The gap caused by immediate depreciation usually doesn’t exceed that amount.
Dealers offer various protection products, like paint sealant, fabric protection, window tinting, wheel protection, and anti-theft devices. These appearance packages add thousands to your purchase.
These services and products are available from independent shops at much lower prices. Dealer-installed protection packages often use inferior products marked up 200–400% above retail. Plus, some dealer modifications might void your manufacturer warranty.
Decline all protection packages at the dealership. If you want additional modifications or treatments, get them done at independent shops where you’ll pay market rates.
A type of loan protection insurance that pays off your auto loan if you die or become disabled. Dealers often pitch this during the financing stage.
This coverage is typically overpriced at dealerships and duplicates protection you may already have through life or disability insurance.
Decline it at the dealership. If you want this protection, purchase it through your regular insurance provider or bank where rates are much lower.
Not every dealer fee is avoidable or unnecessary. You’ll encounter some charges that dealerships must pass on to buyers. While these dealership fees are legitimate, they still pad your purchase price with additional costs that can catch you off guard.
Here are the fees you typically can’t avoid at a dealership:
These fees are regulated, documented, and (mostly) non-negotiable. If minimizing fees and vehicle expenses is your goal, there is another purchasing option that can save you thousands compared to dealerships.
Private-party purchases usually offer better prices than dealerships. There’s no overhead, no additional charges, and no middleman. Find a vehicle for sale and pay for it directly. DealNow makes the car-buying process as convenient as a dealership by providing a secure platform for high-dollar transactions between private parties.
Here’s how DealNow protects you while helping you avoid dealer fees:
Everyone has to pay sales tax and registration, but why bother arguing with dealers over fine print when your car purchase can be safe, smooth, and cheap? DealNow combines the savings of private-party purchases with dealership-like convenience. Start your car search today, and leave the dealer fees in the dust.
Dealer participation in financing often adds 1–3% to your loan rate. They do this because they are willing to accept applicants with worse credit scores. Alternatively, they do this because the buyer doesn’t want to take the time to get approved through a bank. Either way, you’ll end up with a higher monthly car loan payment than you would financing through a bank.
Dealers often offer higher trade-in value but make up for it with fees. This creates the illusion of a good deal while they profit through hidden costs. You’re better off selling your current vehicle privately and using the full cash down amount on your next vehicle.
Every state has different regulations for admin charges. Some states cap these fees at under $100, while others have no limit on what dealers can charge. Check your state’s allowable charges through the Department of Motor Vehicles website before negotiating.
Research the vehicle’s value through multiple sources and factor in all fees. The advertised price rarely reflects the true cost. Get a written breakdown of all charges before signing, and remember that an affordable price on paper can balloon with add-ons.
Dealers base many decisions on your credit score report. An excellent credit score can help you avoid certain fees and qualify for better rates. Those with lower scores often face more pressure to accept dealer add-ons and higher rates.
The destination charge is a legitimate fee set by manufacturers. A delivery charge is an extra fee some dealers add on top. You should only pay the manufacturer’s destination fee—never both.
Electric vehicles face extra charges in certain states. Some states charge additional registration fees to offset lost gas tax revenue. However, you might qualify for tax incentives that offset these costs. Check with your local governing body.
Some dealerships charge for test drives, calling it an “administrative charge” or “vehicle lease” fee. This is unnecessary. Find another dealer or private seller who doesn’t charge for basic customer service.
When dealers push appearance protection packages, stay firm. These protection products typically cost $1,000–$2,000 at dealerships but only $200–$400 from independent shops. Simply say “no” to all additional products during negotiation.
DealNow is the easiest way to close your own vehicle deal, anytime. It’s the safe and simple way to avoid fraud, sign documents, and instantly transact, all in one app.
