Car Buyer’s Minefield: Dealership Fees To Avoid

Be careful maneuvering the car buyer’s minefield and avoid these dealership fees that line the dealer’s pocket and empty yours.

You just bought a car. You did your homework. You did your shopping. And you negotiated a great deal.

Well, before you start popping champagne corks and patting yourself on the back, be advised that you’re not out of the woods yet. Now is the time you have to tip-toe through that minefield known as dealership fees. These are incidental charges that pad your deal in favor of the dealership. They are the inevitable cost of doing business, or so you’ll be told.

And you have to pay them. Or do you? Well, it just so happens that this is the car business, where everything is open to discussion.

Conveyance Fee

Every dealer has this one. Some call it the Processing Fee. Others call it Dealer Documentation or Doc Fee for short. Regardless of what it’s called, your dealer assesses this charge to your deal to cover the cost of processing the paperwork.

Depending on the state where you purchase the car, this fee could be as low as $85 or as high as $999 (source: CarEdge.com). Your dealer will tell you that this fee is non-negotiable. Whether it is or not could actually depend upon your deal. If the dealer is making a real score, then he might waive the fee, so you don’t think he’s the cutthroat capitalist he actually is. If his profit is negligible, then don’t expect any favors.

However, getting this fee waived is no different than any other aspect of your deal. If you don’t ask, you don’t get.

Prep Fee

This fee is charged to your deal to cover the cost of preparing the car for you to pick up. Is it kosher? No.

At all well-run dealerships, the service manager assigns one of his mechanics to prep every new car that comes off a truck. Except for setting a few fuses, verifying the fluids and checking the tires, all new cars are literally ready to drive when they leave the factory. So don’t think the car you bought was prepped especially for you. It wasn’t. And as far as paying the wash kid, most dealer principals consider this employee a cut above an indentured servant. So, the cost of readying your car is negligible.

You can expect to pay from $100 to $500 on average for the prep fee (source: Capital One). However, at the last dealership I worked at, the conveyance fee (the fee mentioned in the previous section) was over $200, which included prepping the car. So, if your dealer tries to pick your pocket twice, tell him you’ll pay one fee, not two.

Delivery Charge

Many customers confuse this with Destination. A delivery charge is a sleight-of-hand designed to prey upon your wallet, as opposed to the vehicle’s destination charge that is built into the price and can be found on the window sticker.

So, if your dealer tries to hit you with a delivery charge on top of the destination charge, tell him to pay it.

Advertising Fee

A dealership advertising fee is as bogus as one of the dealer’s unwritten promises.

Advertising appears on the invoice of the car you’re purchasing. Like the destination fee, it is built into the price. It is the charge by the manufacturer to the dealer for advertising the car on TV, radio, Internet and so forth.

So, refuse to be double-dipped.

Related: What Do Car Salesmen Discuss With the Manager? Top 3 Things

VIN Etching

Etching is an anti-theft countermeasure. It is security that is relatively inexpensive and well worth the cost. The process entails having the vehicle identification number or some other series of numbers etched into the glass. This is accomplished with a stencil and paste. Once the numbers have been branded into the glass, they cannot be removed.

Many police departments and insurance companies advocate window etching. If all the windows are etched and the car is stolen, the thief must replace all the glass before selling your car. This obviously impacts his profit and, therefore, makes your car less attractive to steal. In fact, you might find that your insurance company offers policy discounts for window etching.

Many dealers offer VIN etching as a convenience. Be advised that this could be an expensive convenience. It could cost some $200 to $300. I know of a customer who paid $999 for etching at a dealership in New York City. This guy could have bought a do-it-yourself kit and saved a whopping $960! Or check with your local AAA, whether you have a membership or not. In many cities, they provide this service for a fraction of what a dealership charges.

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Reviewed January 2024